Malaysia urges Chinese firms to avoid using it to dodge US tariffs

Kuala Lumpur: Malaysia has urged Chinese companies to refrain from using it as a base to "rebadge" products to avoid US tariffs, its deputy trade minister said on Monday, amid increasing export restrictions and concerns of a US-China trade war.

Washington is expected to further curb exports to Chinese semiconductor toolmakers and sales of certain chipmaking equipment, including products manufactured in Malaysia, Singapore and Taiwan, sources have 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 panel 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 Jan. 20.