Chinese Companies Shift Manufacturing to Malaysia to Avoid US Tariffs

Chinese Companies Shift Manufacturing to Malaysia to Avoid US Tariffs

Xiao Wei Ling
2 min read

Chinese Companies Shift Manufacturing to Malaysia to Avoid US Tariffs

In recent times, several Chinese companies have planned to relocate their manufacturing operations to Malaysia to evade high tariffs imposed by the US. Starting from August 1, the US will impose tariffs as high as 100% on electric cars, 50% on solar panels, and 25% on lithium batteries from China. This policy change has prompted Chinese companies to expedite the establishment of factories in Southeast Asia. Currently, some companies have transferred their production to Malaysia, Vietnam, and Thailand.

Key Takeaways

  • Several Chinese companies are relocating manufacturing to Malaysia to escape US tariffs.
  • Chinese companies seek tariff exemptions from the Malaysian government.
  • The US will impose high tariffs on various Chinese products from August 1, including electric cars, solar panels, and lithium batteries.
  • The president of the Malaysian Semiconductor Industry Association warns that the US may include products produced in Malaysia on the restricted list.
  • Some Chinese companies have shifted production to Southeast Asian countries such as Malaysia, Vietnam, and Thailand.


The imposition of high tariffs by the US on critical Chinese products has forced Chinese enterprises to move manufacturing bases to Malaysia and other Southeast Asian countries to avoid rising costs. This move may lead to short-term supply chain reorganization and increased operational costs for companies. In the long run, it may boost the development of the manufacturing industry in Southeast Asia, but it also brings geopolitical risks, such as the potential expansion of restrictions to Malaysian products by the US. The Chinese companies seeking local government tariff exemptions to ensure the operation of new factories may impact Malaysia's trade policies and international relations. In the future, the uncertainty of US policies will continue to affect global supply chain layouts.

Did You Know?

  • Tariff Exemptions: Tariff exemptions refer to a commitment by a country's government to exempt specific companies or products from tariffs. This protection is usually aimed at attracting foreign investment or promoting the development of specific industries. In this context, Chinese companies are seeking tariff exemptions from the Malaysian government to ensure that they can avoid economic losses due to the high US tariffs after relocating their manufacturing operations to Malaysia.
  • Malaysian Semiconductor Industry Association: The Malaysian Semiconductor Industry Association (MSIA) is an organization representing Malaysia's semiconductor industry, aimed at promoting its growth and development. The association provides policy recommendations, market information, and business development support to its members through collaboration with the government and other industry organizations. In this context, the concern expressed by Datuk Seri Wong Siew Hai, the president of the association, about the possibility of the US including products produced in Malaysia on the restricted list, reflects the pivotal role of industry associations in international trade policy changes.
  • Southeast Asian Countries: Southeast Asian countries generally refer to nations located in the Southeast Asian region, including but not limited to Malaysia, Vietnam, Thailand, Indonesia, the Philippines, among others. Due to their relatively low labor costs and improving infrastructure, these countries have become hotspots for the global shift in manufacturing. In this context, due to the high tariffs imposed by the US on Chinese products, Chinese companies are choosing to relocate production to these Southeast Asian countries to avoid tariffs and reduce production costs.

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