Guest Editorial: Broader implications for Trump’s tariff threats

By Samirul Ariff Othman

President-elect Donald Trump's tariff threats against the BRICS nations—a grouping of emerging economies like Brazil, Russia, India, China, and South Africa—have sparked global headlines, but for Malaysia, the direct impact is negligible. Malaysia is merely an observer of the BRICS bloc, not an active participant, which insulates it from the immediate fallout of Trump’s fiery rhetoric. That said, the broader implications for global trade and economic dynamics are worth Malaysia’s attention. Trump’s warning against the creation of a BRICS currency to rival the U.S. dollar—coupled with his call for 100% tariffs—may sound like the bluster of a reality-TV president flexing his negotiating muscles, but beneath the noise lies a profound challenge to the post-World War II financial order.

For decades, the U.S. dollar has ruled global commerce, not because it was decreed from on high, but because of the market’s trust in its stability. Malaysia, with its robust oil and gas sector, will likely continue trading in dollars, a pragmatic choice that makes sense for now. However, as BRICS explores alternatives and bilateral trade in regional currencies grows, the dollar’s dominance no longer seems invincible. This shift is gradual but significant, and Malaysia, like any savvy player in a dynamic marketplace, must prepare for a future where the rules may look very different.

Economists remind us that this is not the first time the dollar has faced challengers. Its dominance has been sliding slowly, with official reserves in dollars shrinking from 70% in 1999 to under 60% today. Yet, alternatives to the greenback remain limited. While BRICS has potential, it is not an economic or political union, and the complexities of creating a shared currency rivaling the dollar are immense. Malaysia should tread carefully but seize opportunities for diversification—both in trade partnerships and currency settlements—without overcommitting to any single camp. Staying neutral while engaging actively with both the U.S. and BRICS keeps its options open in a rapidly shifting global economy.

Trump’s threats, however, underscore the competitive—and increasingly fraught—nature of global trade. If Malaysia is indirectly impacted, it may be through American multinationals operating locally, whose exports back to the U.S. could face new costs under a tariff war. Still, imposing steep tariffs would ultimately hurt U.S. consumers, who would bear the brunt of higher import prices, potentially slowing America’s own economy. This is the paradox of Trump’s approach—what looks like strength often reveals itself to be vulnerability.

Malaysia

For Malaysia, the lesson is clear: focus on resilience. Diversify trade, embrace regional currencies where practical, and stay ahead of global monetary shifts. Malaysia’s observer status in BRICS is a strategic perch—it allows the country to explore new opportunities without becoming entangled in geopolitical drama. Trump’s tweets may grab headlines, but Malaysia’s future lies in staying grounded, adaptable, and always prepared for the next twist in the global economic narrative.

Malaysia should not lose sleep over Donald Trump’s fiery threats to slap 100% tariffs on BRICS nations, particularly as it enjoys the protective buffer of being a “partner country” and merely an observer in the BRICS bloc. Yet, in a world where global trade can shift faster than a viral tweet, complacency is not an option. While Malaysia is not directly in the crosshairs, the broader ripples of Trump’s trade war rhetoric—if acted upon—could rock the global economic boat, and Malaysia must be prepared to adjust its sails.

For now, Malaysia’s economic fundamentals and trade in U.S. dollars provide a steady anchor. Its oil and gas exports remain dollar-dominated, and American multinationals operating in Malaysia are unlikely to support tariffs that hurt their bottom line. Yet, this doesn’t mean Malaysia can sit back. Global trade flows are interconnected, and any turbulence in BRICS economies could indirectly impact Malaysia’s markets, supply chains, and regional trade dynamics. Trump’s rhetoric also reflects deeper tectonic shifts in the global order, as BRICS pushes back against U.S. dollar dominance—a push that Malaysia cannot ignore.

The smart play for Malaysia is to hedge its bets and diversify. It should deepen its trade ties with BRICS nations while safeguarding its vital relationship with the U.S. By promoting regional currency trade, Malaysia can reduce its dollar dependence, aligning itself with a world where bilateral trade in local currencies is gaining traction. At the same time, Malaysia should fortify its economy by investing in high-value industries like tech and green energy, which are more insulated from global trade spats.

Diplomacy

Diplomacy will be key. Malaysia must lean into its “partner country” status with the U.S., emphasizing the mutual benefits of strong ties and staying out of the line of fire in any potential tariff war. Meanwhile, engaging actively in ASEAN and other multilateral platforms can help Malaysia protect its trade interests while maintaining a neutral but proactive stance.

In an era of shifting alliances and unpredictable policies, Malaysia must be agile, resilient, and forward-thinking. Trump’s threats may not be an immediate storm on Malaysia’s horizon, but the winds of change are blowing, and those who prepare today will sail smoothly tomorrow.

Malaysia’s long-practiced neutrality in foreign policy might just be its best insurance policy against Trump’s latest round of tariff saber-rattling. By staying strategically non-aligned, Malaysia has carved out a space where it can build bridges with both the U.S. and the BRICS nations without getting caught in the crossfire. But neutrality isn’t a force field; it doesn’t shield Malaysia from the indirect fallout of a potential U.S.-BRICS trade war. The global economy is too interconnected, and the shockwaves from such a confrontation could disrupt supply chains, roil financial markets, and complicate trade dynamics for everyone, including Malaysia.

Realistically

Now, is Trump’s tariff push even realistic? The short answer: it’s a high-stakes poker game. A 100% tariff on BRICS countries for daring to explore non-dollar trade is more of a headline-grabbing bluff than a practical policy. For starters, it’s a legal minefield under WTO rules, and it would ignite a tit-for-tat retaliation that could spiral into a full-blown trade war. Domestically, U.S. businesses and consumers would be the first to feel the sting. Imagine the cost of goods doubling overnight and companies grappling with skyrocketing supply chain costs. Add to that the backlash from Congress and the broader global business community, and you’ve got a recipe for chaos.

But let’s say Trump pushes forward anyway. The repercussions for the U.S. economy would be like setting your house on fire to get rid of a pest. Consumers would face higher prices, driving inflation and reducing spending power. Businesses dependent on imports from BRICS countries would see profits nosedive, forcing layoffs and cutting investment. And let’s not forget the retaliation—BRICS nations wouldn’t just sit back; they’d slap tariffs on U.S. exports, hitting everything from American soybeans to tech gadgets. Worse, such a move would accelerate the very thing Trump fears most: the erosion of U.S. dollar dominance. By alienating trading partners, he would push them further into exploring alternatives to the dollar, undermining its global role.

So, while Malaysia’s neutrality might keep it out of the direct line of fire, it needs to stay nimble. Strengthening regional trade ties, diversifying its economy, and staying deeply engaged in multilateral forums will be critical. As for the U.S., Trump’s tariff threats are a risky gamble that could backfire spectacularly, leaving not just the BRICS nations but also America worse off. In an interconnected world, protectionist overreach isn’t just bad policy—it’s economic self-sabotage.

Samirul Ariff Othman

Economist Samirul Ariff Othman is an adjunct lecturer at Universiti Teknologi Petronas, international relations analyst and a senior consultant with Global Asia Consulting.

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