Call for contingency plans in face of US govt shutdown

 

-Photo credit Reuters.

PETALING JAYA: Several export-oriented sectors in Malaysia will be impacted if there is a prolonged shutdown of the US government, say industry players.

As one of the country’s largest export markets, contingency plans should be drawn up to assist the affected sectors in weathering the effects of the political impasse in Washington DC.

Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said that while the impact of a short-term shutdown would be minimal, an extended one would create a ripple effect on the US economy and Malaysian exporters.

“If US civil servants are not paid their salary, this will decrease their spending power and consumption. This in turn will affect the export of our furniture to the United States.

PETALING JAYA: Several export-oriented sectors in Malaysia will be impacted if there is a prolonged shutdown of the US government, say industry players.

As one of the country’s largest export markets, contingency plans should be drawn up to assist the affected sectors in weathering the effects of the political impasse in Washington DC.

Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said that while the impact of a short-term shutdown would be minimal, an extended one would create a ripple effect on the US economy and Malaysian exporters.

“If US civil servants are not paid their salary, this will decrease their spending power and consumption. This in turn will affect the export of our furniture to the United States.

“Also, the shutdown will interrupt services such as customs clearance at the ports and entry points in the United States. This will become an issue for our exporters.

“The disruption to the logistics sector would have an impact on the supply chain.

“This will be especially true for Malaysian companies involved in the export of electrical and electronics (E&E) products to the United States, which is a major importer,” he said when contacted yesterday.

The United States is one of the largest importers of Malaysian E&E, totalling almost RM120bil last year and representing about 20% of the country’s total E&E exports.

Of these figures, some RM60bil were semiconductor products, which account for about 20% of Malaysia’s total semiconductor exports.

Koong suggests that Malaysia leverage its position as Asean Chair to coordinate with other Asean members states and regional countries in facilitating exports.

“We could leverage the strength of Asean as a whole in respect of the individual countries’ niche products and services,” he added.

If there is a prolonged shutdown, he said the government should assist exporters by exploring other potential markets such as the Middle East and Africa.

Koong noted that development grants and soft loans, which were announced in Budget 2026, could help small and medium enterprises (SMEs) weather the effects of a prolonged shutdown.

The US government shutdown, which began on Oct 1, was triggered by the US Congress’ rejection of a Republican funding Bill, resulting in some 750,000 federal government workers being furloughed without pay.

The deadlock is expected to persist for a third week despite pressure from President Donald Trump on the Democrats to support the Republican Bill.

Airfreight Forwarders Association of Malaysia chairman Thomas Mathew said the shutdown, though a US domestic political issue, carries far-reaching implications for the global economy.

“As one of the world’s largest importers and exporters, any disruption in the operations of US federal agencies reverberates through supply chains worldwide,” he said when contacted yesterday.

Among the immediate impacts of the shutdown are delays in customs clearance, port congestion and slower regulatory processing by key US agencies, he added.

“This includes the Customs and Border Protection (CBP), the Department of Commerce, and the Food and Drug Administration (FDA).

“These delays can significantly disrupt the flow of goods into and out of the United States, prompting re-routing, rescheduling, and increased costs across shipping networks,” he said.

Mathew said a prolonged shutdown would have a multifaceted impact on Malaysia, as the country is a key trading partner of the United States, particularly in the E&E and manufacturing sectors.

“Malaysia may encounter delays in order fulfilment, payment cycles, and reduced demand from US buyers facing their own domestic uncertainties,” he said.

He added that there could also be logistical slowdowns affecting compliance-dependent sectors that require US regulatory approvals, such as semiconductors, medical devices and pharmaceuticals.

“Additionally, any resulting market volatility may impact the ringgit, investor confidence and broader business sentiment in Malaysia,” he said.

While a short-term shutdown can be absorbed with minimal disruption, a prolonged one risks undermining the predictability and efficiency upon which global trade and export-driven economies rely on.

Mathew suggests that contingency plans are drafted for the affected sectors.

“Diversifying trade partnerships will be key for Malaysian businesses navigating such external shocks,” he added.

Malaysian Consortium of Mid-Tier Companies honorary president Callum Chen said a prolonged shutdown would be a double whammy to businesses, not only globally but also Malaysian too.

“The impact will make things worse. Ports in the United States are already jam-packed with stuck containers due to tariff uncertainties.

“Most US SMEs are already facing cash flow problems due to the tariffs,” he said when contacted.

He added that unpaid US federal workers would be forced to prioritise their spending.

“They will have less money to buy things, and their priority will be putting food on the table,” he said.

Chen expects the latest episode to be longer than the previous 35-day shutdown from Dec 22, 2018, to Jan 25, 2019, which is the longest in US history.

“Everyone is in a limbo and this only creates more uncertainty for businesses,” he said.

https://www.thestar.com.my/news/world/2025/10/11/white-house-says-substantial-us-government-job-cuts-have-begun

https://www.thestar.com.my/news/nation/2025/10/12/experts-theres-a-silver-lining-amid-us-shutdown

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Goodbye trade war

Goodbye trade war

 

China seems to be winning the tariff war even as Trump threatens to impose a massive increase of tariffs on Chinese imports in response to the republic's announcement of new export controls on rare earths. — Getty Images/AFP

South-east asia, once only a bruising trade war’s secondary victim, should now have asean showing its mettle as china wins.

BEYOND multiple global uncertainties are two core fundamentals: Us-china relations being the world’s most important bilateral relationship, and economics determining much of everything else.

This makes the trade war between the world’s two biggest economies pivotal to all. Multiple spheres in various regions are impacted accordingly.

That much is the main plot in today’s geopolitics. Problems tend to arise when the script is amended without warning, explanation or acknowledgement.

US President Donald Trump has sought a personal meeting with Chinese President Xi Jinping since last year, but that will happen only next year. Why does it take two years for such a crucial event to occur?

It is precisely because of the summit’s importance that it has to take so long. Unlike MOUS, summits do not set the tone of an intended agreement but to cap what has already been agreed.

Transnational deals are too important to be left to formal summits with their pomp and pageantry. The serious business of negotiations by government experts and specialists differs vastly from the PR theatre of official photo opportunities.

The months and years between signalling interest in a summit and actually holding it are for senior officials to work out sufficiently agreeable terms to constitute a deal. That period of talks by officials began informally last year between the incoming US administration and China’s incumbent team.

It is a period now effectively coming to a close in ending the trade war, but still only unofficially. The basic agreement that is now done in all but writing has the US broadly conceding to China’s terms.

China is the only country that has pushed back on Trump’s tariffs, with resounding effect as recent events show.

After Commerce Secretary Howard Lutnick’s grating condescension about supplying China with only Nvidia’s sub-par microchips, Beijing blocked all of Nvidia’s chips. Nvidia boss Jensen Huang said China’s own chip development is only “nano seconds behind” his company’s best products.

In agriculture, China has stopped buying US soybeans for supplies from Brazil and elsewhere. With US farmers devastated, China again demonstrated considerable leverage.

With Trump clamping down on countries buying Russian and Iranian oil and gas, India was hit with high additional tariffs, but not China. Instead, China raised Russian gas supplies with the Power of Siberia (POS) pipeline and now also POS 2.

China is also importing more than a million barrels of Iranian oil daily, amounting to almost 90% of Iran’s output. These major purchases were never going to be impacted by US restrictions.

Trump declared victory on Tiktok but it was a net gain for China. Beijing refused to sell Tiktok’s proprietary algorithm, the heart and brain of the winning platform.

A copy of the original algorithm was supplied to US investors, and China’s Bytedance owns just under 20% of US Tiktok – yet is entitled to 50% of US profits. US negotiators must have realised that was the most they could get from China’s tough bargaining position and accepted it.

China has introduced new restrictions on rare earth exports, launched an antitrust probe into US chip giant Qualcomm, and will raise port fees for US ships in return. In virtually every sector China is fighting back through tit-for-tat action and new policies.

If there is still any doubt that China is leading the charge of what remains of the trade war, its use of carrots and sticks to access the US market confirms it. Beijing has offered more than a trillion dollars (RM4.2 trillion) of investment in the US through Chinese companies admitted there.

These could include Chinese electric vehicle companies, which Trump last year said he would invite to the US to provide jobs. Only the stronger economy can dish out inducements of such proportions to the relatively subordinate economy.

Such is the substance of a negotiated trade peace. Ultimately, Trump is less concerned about what actually makes a trade victory than what can be interpreted and portrayed as his personal triumph.

He is anxious to gain snatches of a win between trade skirmishes, however fleeting or questionable, and China is only too happy to provide them to win the trade war. More of this can be expected at next year’s summit.

Meanwhile, Louis Gave of Hong Kong’s Gavekal Research has declared China’s trade war victory. South-east Asia should likewise flip the old script to its favour.

Asean countries are not just collateral economies subjected to the whims of a trade conflict. When China takes a beating, South-east Asia was assumed to be beaten also.

But the US still hopes to obtain from this region what it failed to get from China. To do this it needs to keep up appearances that it is winning over China as the centre of global supply chains.

Asean can call that bluff to protect itself.

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Call for contingency plans in face of US govt shutdown