Malaysia Tells Chinese Firms: 'Don't Use us to Dodge US Tariffs'

Malaysian trade officials have been urging Chinese companies not to use the country as a base to “rebadge” products so they can avoid US tariffs.

Deputy Trade Minister Liew Chin Tong said this week that Kuala Lumpur preferred to avoid getting caught in the middle of a trade war between the US and China, which could escalate once Donald Trump takes office again in mid-January, after repeated threats to hike tariffs on Chinese goods.

Liew made this admission just as Washington announced a third wave of chip export controls on Chinese chipmakers and parts suppliers.

ALSO SEE: China Hits Back at US Bans, Halts Export of Key Chip Materials

Washington’s latest export curbs targeted 140 Chinese companies in the semiconductor sector and included products manufactured in Malaysia, Singapore and Taiwan, as sources had told Reuters.

Malaysia is a major player in the semiconductor industry, accounting for 13% of global testing and packaging, and is seen as well placed to grab further business in the sector as Chinese chip firms diversify overseas for assembling needs.

“Over the past year or so… I have been advising many businesses from China not to invest in Malaysia if they were merely thinking of rebadging their products via Malaysia to avoid US tariffs,” Malaysia’s deputy trade minister Liew Chin Tong told a forum on Monday.

He did not specify the types of businesses.

Liew said regardless of whether the US had a Democratic or Republican administration, the world’s largest economy would impose tariffs, as seen in the solar sector.

Washington imposed tariffs on solar exports from Vietnam, Thailand, Malaysia and Cambodia – home to factories owned by Chinese firms – last year and expanded them in October following complaints from manufacturers in the United States.

US President-elect Donald Trump has threatened to slap an additional 10% tariff on all Chinese imports when he takes office on January 20.