Malaysia’s furniture industry, a cornerstone of the nation’s export economy, is grappling with significant challenges following the United States’ imposition of a 24% tariff on Malaysian goods. Industry leaders have warned that the tariffs, which came into effect in early April 2025, are causing shipment delays, order cancellations, and growing uncertainty among manufacturers and exporters. With the US accounting for 60% of Malaysia’s furniture exports, the economic ripple effects could be felt for years to come.

Immediate Impact on Shipments and Orders

The Malaysian Furniture Council’s deputy president, Matthew Law, revealed that many manufacturers have been forced to postpone shipments to the US due to market uncertainty. “Our clients have requested us to temporarily hold off on shipments” he said, highlighting the immediate disruption caused by the tariffs. Some US clients have already placed existing orders on hold, awaiting clarity on how costs will be managed in the coming months.

Law noted that while some industry players expect resolution within two to three months, the unpredictability of the situation persists. “It’s unclear how much of this cost will be passed on to consumers, as manufacturers may absorb some of the expenses” he added. This uncertainty has left exporters in limbo, balancing the risk of financial losses against the hope of future stability.

Steve Ong Yeou Huan, president of the Federation of Johor Furniture Manufacturers and Traders Associations, echoed these concerns. He confirmed that several American clients have requested exporters to suspend shipments temporarily, as negotiations for lower tariff rates continue. “Some furniture export orders are currently on hold due to the uncertainties surrounding the new tariffs” Ong said, though he noted that certain shipments are still proceeding as normal.

A Critical Market Under Threat

The United States is a vital market for Malaysian furniture, with exports valued at RM12.828 billion (US$2.7 billion, based on exchange rates as of May 24, 2025) as of February 2025. The industry specializes in high-demand products such as solid wood furniture, dining tables, chairs, upholstered sofas, and modular designs. Other significant markets, including Singapore, Australia, Japan, and the United Kingdom, provide some diversification, but none match the scale of the US market.

The tariffs, announced on April 2, 2025, apply broadly to imports from nearly every country, including Malaysia. Effective April 5, all Malaysian products shipped to the US incur at least a 10% duty, with most facing a 24% rate as of April 9, though some exemptions apply. While Malaysia’s tariff rate is lower than that imposed on certain other countries, Ong warned that clients might still shift production to nations with even more favorable terms. “The only viable path forward is for our government to negotiate with the United States to reduce the tariff rate as much as possible” he urged.

Government Response and Economic Concerns

The Malaysian government has responded swiftly to the crisis, with the International Trade and Industry Ministry (Miti) engaging industry representatives to assess the tariffs’ impact. Deputy Plantation and Commodities Minister Datuk Chan Foong Hin assured that while lumber products currently enjoy exemptions, the ministry remains vigilant amid potential new trade restrictions. Ongoing investigations could lead to further tariffs, adding to the uncertainty.

Chan emphasized that the ministry is working closely with Miti and other agencies to protect Malaysian industries. “Datuk Seri Johari Abdul Ghani, the Minister, is working with the National Geoeconomic Command Centre (NGCC) to assess the impact of these tariffs and develop strategies to mitigate any adverse effects on Malaysia’s economy and industries” he stated. These efforts signal a coordinated push to safeguard a sector critical to the national economy, though tangible outcomes remain uncertain.

Long-Term Implications for Competitiveness

Beyond immediate disruptions, the tariffs pose a broader threat to Malaysia’s competitiveness in the global furniture market. Ong cautioned that if American clients relocate production to countries with lower tariffs, Malaysia’s position as a leading exporter could be undermined. This concern is compounded by the challenges of adapting production to new markets or regions. As Law pointed out, relocating manufacturing is far from simple, requiring significant time to adjust styles, designs, and supply chains to meet different consumer preferences.

The potential for long-term economic impact is a pressing concern for policymakers. Analysts suggest that sustained tariffs could weigh on Malaysia’s economy for years, particularly if negotiations with the US fail to yield favorable terms. The furniture sector, which employs thousands and contributes billions to the GDP, could face reduced growth, job losses, and diminished investor confidence if the situation persists.

Broader Context of US Trade Policy

The tariffs on Malaysian goods are part of a wider US trade policy shift, affecting imports from numerous countries. While the stated aim of such measures often includes protecting domestic industries and addressing trade imbalances, the fallout for exporting nations like Malaysia can be severe. Smaller economies, heavily reliant on access to the US market, are particularly vulnerable to such policy changes.

For Malaysia, the challenge is twofold: maintaining access to a critical market while diversifying export destinations to reduce dependency on the US. Industry experts argue that strengthening ties with other key markets, such as Singapore and Japan, could provide a buffer, though this transition would require time and investment. Additionally, enhancing domestic value addition and exploring new product lines might help mitigate the impact of tariffs, but these strategies are not immediate solutions.

Human and Economic Stakes

Behind the numbers and policy discussions lie the human and economic stakes for Malaysia’s furniture industry. Factories in regions like Johor, a hub for furniture manufacturing, face the prospect of reduced orders and potential layoffs if the situation deteriorates. Small and medium-sized enterprises (SMEs), which form a significant portion of the sector, may lack the resources to absorb tariff-related costs, placing them at particular risk.

Workers in the industry, from craftsmen to logistics staff, are also feeling the strain. The uncertainty surrounding shipments and orders has created anxiety among employees, many of whom rely on stable export demand for their livelihoods. Community leaders in manufacturing hubs have called for government support to protect jobs and sustain local economies during this challenging period.

Looking Ahead: Challenges and Opportunities

As Malaysia navigates the fallout from the US tariffs, the path forward remains fraught with challenges. Successful negotiations to lower tariff rates could provide much-needed relief, but the outcome is far from guaranteed. In the meantime, industry players are exploring ways to adapt, from cost-sharing arrangements with clients to seeking alternative markets.

Yet, amid the uncertainty, there may also be opportunities for transformation. The crisis could spur innovation within the furniture sector, encouraging manufacturers to develop new designs or target untapped regions. Government initiatives to support exporters, if effectively implemented, might also help the industry weather the storm.

For now, Malaysia’s furniture exporters and policymakers are in a holding pattern, awaiting clarity on the tariffs’ long-term impact. As negotiations unfold and global trade dynamics shift, the resilience of this vital industry will be tested. The question remains whether Malaysia can turn this challenge into a catalyst for growth, or if the weight of US tariffs will leave a lasting mark on its economy.