How Malaysia Can Strengthen Multilateralism Under Trump 2 0

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From Ahmad Azhar
When Donald Trump first entered the White House in 2017, his “America First” doctrine rattled global markets and disrupted longstanding trade relationships.
Now, with his return to the Oval Office the world is bracing for a second round of economic nationalism.
For Malaysia, a mid-size economy deeply integrated into global supply chains, Trump’s presidency presents both risks and unexpected opportunities.
Trade winds and tariff storms
A hallmark of Trump’s previous tenure was his aggressive trade war with China. With expectations that Trump 2.0 will double down on tariffs and supply chain decoupling, Malaysia finds itself in a precarious position.
China is now Malaysia’s biggest trading partner. As a key supplier of semiconductors, electrical components, and palm oil, Malaysia has long benefited from its ability to navigate between China and the US.
However, if Trump escalates his economic warfare with Beijing, Malaysian exports — deeply intertwined with Chinese supply chains — could suffer collateral damage.
On the other hand, US efforts to shift production away from China could accelerate investment flows into Malaysia. The country has already benefited from multinational firms relocating manufacturing operations to Asean markets, particularly in electronics and technology.
Currently, the US reaps the highest earnings from overall foreign direct investments in Malaysia. With Malaysia’s strategic geographical location, a skilled workforce, and participation in the US-led regional trade agreement Indo-Pacific Economic Framework, it is well positioned to capture a share of redirected US investments — provided it moves swiftly to enhance its competitiveness.
The ringgit and the dollar’s grip
Trump’s return is likely to spark renewed volatility in global currency markets. His previous presidency saw an erratic trade policy and fiscal expansion that strengthened the US dollar, putting pressure on emerging market currencies, including the Malaysian ringgit.
In 2018, the ringgit weakened by over 5% against the dollar amid Trump’s tariff wars, a scenario that could repeat itself if protectionist policies return. If a similar scenario unfolds, Bank Negara Malaysia may be forced to intervene more aggressively to stabilise the currency and manage inflationary pressures.
Meanwhile, Malaysia’s recent pivot towards BRICS, alongside discussions on de-dollarisation, adds another dimension to its economic strategy. While reducing dependence on the US dollar may offer long-term resilience, the immediate risks of unsettling global markets and potential American retaliation should not be underestimated.
By leveraging BRICS, Malaysia can explore new financial mechanisms, including settlements in alternative currencies, while securing deeper economic ties with key emerging economies such as Russia, India and Brazil.
This shift softens Malaysia’s counterbalance with China, and provides a multipolar institutional hedging to Western financial dominance, which enhances Malaysia’s economic resilience in an increasingly fragmented global order.
Geopolitical balancing act
Beyond economics, Trump’s erratic foreign policy could alter Malaysia’s geopolitical calculus.
During his first term, Trump largely ignored Southeast Asia, preferring bilateral dealings over multilateral diplomacy.
His transactional approach to foreign policy — where alliances are measured in dollars and cents rather than diplomatic goodwill — may put pressure on Malaysia to explicitly align with US interests in the Indo-Pacific, particularly concerning China and the South China Sea.
Yet, Malaysia has historically maintained a non-aligned stance, balancing great power rivalries with strategic pragmatism.
It remains to be seen whether the Anwar Ibrahim administration will shift towards a more accommodating stance with Washington, or double down on Asean’s doctrine of neutrality.
Much will depend on whether Trump’s administration re-engages the region meaningfully or continues its inward-looking policies.
Malaysia’s engagement with BRICS and other multilateral platforms such as Asean and the Regional Comprehensive Economic Partnership can act as a stabilising force in uncertain times.
By strengthening its ties within these blocs, Malaysia can reinforce economic and diplomatic alternatives, ensuring that it is not overly reliant on any single superpower.
The New Development Bank, BRICS’s lending arm, offers another avenue for Malaysia to secure funding for infrastructure and digital transformation projects outside of Western financial institutions, reducing exposure to potential US economic leverage.
Recent tensions over Trump’s approach to the Israel-Palestine conflict, particularly his so-called “Gaza Riviera” proposal, have further complicated Malaysia’s diplomatic posture.
Malaysia, a staunch supporter of Palestinian rights, has strongly condemned Trump’s policies, leading to diplomatic friction.
While its criticism is unlikely to result in direct economic retaliation from Washington, it adds another layer of complexity to Malaysia’s efforts to balance its global partnerships.
Malaysia’s strong ties with the Muslim world could be leveraged to strengthen its international standing in multilateral negotiations while continuing to advocate for a more balanced global order.
This diversified approach allows Malaysia to remain agile, leveraging multiple partnerships to safeguard its national interests while maintaining a neutral diplomatic stance.
Opportunity in uncertainty
As the world re-enters the unpredictability of a Trump presidency, Malaysia must prepare for heightened economic and geopolitical turbulence.
Yet, uncertainty breeds opportunity.
With proactive economic policies, trade diversification, and a calibrated foreign policy, Malaysia could emerge as a net beneficiary of the shifting global order. The challenge is not just to weather the storm, but to harness its winds for strategic advantage.
Strengthening multilateral cooperation through BRICS, Asean, and other platforms will be crucial in ensuring Malaysia remains an influential player in the global economy, rather than a passive observer of geopolitical shifts.
If played correctly, Malaysia’s ability to navigate these complex relationships could serve as a model for other mid-size economies looking to balance between competing global powers. - FMT
Ahmad Azhar is a member of the Oxford University Strategic Studies Group.
The views expressed here are those of the writer and do not necessarily reflect those of MMKtT.

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