On Thursday, Malaysia expressed serious concerns about the impact that potential U.S. tariffs on BRICS countries could have on the global semiconductor supply chain. The warning came after U.S. President-elect Donald Trump suggested imposing 100% tariffs on BRICS nations unless they stopped efforts to create a new currency or abandon the use of the U.S. dollar. The BRICS group consists of major emerging economies, including Brazil, Russia, India, China, and others, and has been trying to challenge the economic dominance of Western countries.
Malaysia, which has applied to join the BRICS group, is watching these developments closely. Although Malaysia is not yet a member, the country is an important player in the global semiconductor industry, especially in chip testing and packaging. If the U.S. were to go ahead with these tariffs, Malaysia fears it could disrupt the global supply of semiconductors, which are essential for many of the products we use every day, from smartphones to cars.
The Importance of Semiconductors to Malaysia
Semiconductors are tiny chips that power most modern technology. Malaysia is a key hub for the global semiconductor industry, contributing about 13% of the world’s chip testing and packaging. This means that a significant number of the chips used in electronic devices are processed and tested in Malaysia. The U.S. is Malaysia’s third-largest trading partner, and many U.S. companies invest in the country’s semiconductor sector. In fact, a large portion of Malaysia’s semiconductor industry is tied to American businesses.
The potential of U.S. tariffs affecting these industries could have disastrous consequences for both countries. If tariffs are imposed, it would make the cost of trading semiconductors between the U.S. and BRICS countries, including Malaysia, significantly more expensive. This could lead to higher prices for consumers and even delays in production as companies struggle to navigate new trade barriers. As both the U.S. and Malaysia rely on each other for their semiconductor needs, the tariff threat could harm both sides of the supply chain.
BRICS and De-dollarization
The BRICS countries, in particular, have been discussing the possibility of reducing their reliance on the U.S. dollar in international trade. The idea of creating a new currency to replace the dollar has been gaining attention, especially after Western countries imposed sanctions on Russia due to the war in Ukraine. However, as of now, there has been no official decision from the BRICS countries to create a new currency or fully abandon the U.S. dollar.
Trump Warns BRICS: 100% Tariffs if Dollar is Replaced
Despite the ongoing discussions about de-dollarization, the U.S. has shown its intention to strongly defend the dollar’s dominance in global trade. If the U.S. were to impose tariffs on BRICS countries, it would be seen as a direct response to these nations’ efforts to create alternatives to the U.S. dollar. The move could trigger even more aggressive actions from BRICS countries, potentially leading to further global economic instability.
While Malaysia is not yet a member of the BRICS group, the country’s position as a key player in the semiconductor industry means that it would be significantly impacted by any trade restrictions or tariffs. Malaysia has made it clear that any drastic move by the U.S. could hurt both nations, as the supply chains that rely on semiconductor exports are closely tied to both the U.S. and BRICS economies.
In conclusion, the potential imposition of tariffs on BRICS countries by the U.S. could have far-reaching effects on the global semiconductor supply chain, with Malaysia warning that such a move would harm both parties. The situation highlights the delicate balance between international trade and the global economy, and how any drastic measures could disrupt the flow of critical technology products.
