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GEORGE TOWN, Feb 13 — Malaysia could find itself targeted for protectionist measures under the Trump administration although there is no “clear and present danger’” yet, a Fitch Group Unit said today.
BMI Research listed Malaysia together with India, Italy, Taiwan and Vietnam as “not yet on the radar, but at risk”.
Listed for “clear and present danger” of trade confrontation with the US were China and the North American Free Trade Agreement (NAFTA), particularly Mexico. Next in line were Japan, Germany and South Korea.
“It is underappreciated how many countries could be directly targeted for protectionist measures by the Trump administration, in our view,” said BMI Research in a statement.
BMI Research said although Malaysia was not a significant trade partner of the US, changes in bilateral deals between both countries could be made under President Donald Trump’s policy reform initiatives.
“The US will attempt to renegotiate bilateral trade relations with the countries that account for a large proportion of the US’ trade deficit.
“India, Malaysia And Taiwan each account for around 3 per cent of the total US trade deficit and are at risk of trade confrontation with the US in the coming years,” said BMI Research.
BMI Research said US trade deficit with Malaysia was at US$24.8 billion (RM1.06 trillion) and that the deficit had earlier narrowed between 2006 and 2011 due to the collapse in US machinery imports from Malaysia.
“However, a surge in Malaysian electronics exports has offset this decline and resulted in a doubling of the US-Malaysia trade deficit since 2011,” it said.
The purpose of the US to adopt such measures, BMI Research said, was to strengthen its manufacturing sector.
BMI Research, therefore, suggested that the size of the manufactured goods trade deficit with a country to be the most relevant factor in determining which countries will fall into “US hit list”.
The study also pointed that Trump was expected to significantly reduce the US$347 billion (RM1.5 trillion) trade deficit with its largest trading partner, China.
Another trade deal that BMI suggested to fall under the “clear and present danger” category was NAFTA.
Trump had previously derided the free trade pact with US, Canada and Mexico after condemning the deal as a catastrophe to US workers, jobs and companies.
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