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Former Chief Minister of Malaysia's Sabah state, Datuk Yong Teck Lee, has said that Sabah's direct exports to the United States are so small that the 24% tariff imposed by the US on Malaysian exports will have virtually no effect on the state's international trade.
He explained that Sabah's main exports include oil and gas, palm oil and its derivatives, timber products, seafood, silica sand and food products, with most of these shipments going to Northeast Asian countries (China, Japan and South Korea), India, Europe, ASEAN nations and Peninsular Malaysia.
He noted that Sabah's direct exports to the United States in 2025 are estimated at only around 1% of the state's total exports — roughly one billion ringgit out of Sabah's overall exports of 100 billion ringgit.
He added that Sabah's exports to the US mainly consist of oil and gas, timber products and palm oil. Only recently has Sabah begun shipping growing volumes of copper foil to the United States.
He pointed out that the good news for Sabah is that copper (along with some timber products) is among the few items exempted from the new so-called reciprocal tariffs, meaning Sabah's copper foil exports and certain timber products will not be affected by what he termed "President Donald Trump's tariffs".
On the palm oil tariff, Yong explained that the volume exported to the United States represents only a very small fraction of Sabah's total palm oil and palm-based product exports, estimated at around 20 billion ringgit in 2025. "Most of Sabah's palm oil exports go to China, India and Europe, particularly the Netherlands. So it would not be difficult for Sabah's exporters to redirect shipments away from the US market towards other major markets," he said.
He stressed that what Sabah's palm oil sector needs is stable fertiliser prices, adequate farm labour supply, and improved local infrastructure and logistics in order to boost the industry's productivity.
However, Yong warned that if the global trade war sparked by Trump's tariffs leads to a significant slowdown in the economies of Peninsular Malaysia, ASEAN, China, Japan, India and Europe — Sabah's key trading partners — the state's economy would inevitably be affected as the purchasing power of its export markets declines.
Yong, who is also president of the Sabah Progressive Party (SAPP), said any potential decline in Sabah's government revenue resulting from lower global oil prices could be offset by Petronas increasing its oil output, in line with OPEC+'s recent decision to raise production by 411,000 barrels per day.
He noted that OPEC has confirmed that global demand for oil and gas remains stable, with strong underlying fundamentals supporting demand.
Turning to concerns in Peninsular Malaysia, Yong said the states of Penang and Selangor are most exposed to the impact of the new US tariffs, given their substantial American and foreign investment in high-tech industries, some of which could decide to relocate back to the United States. He affirmed that reshoring industrial production to the US is one of the core objectives behind Trump's tariffs, aimed at reclaiming manufacturing capacity that America has lost to other countries over three decades of globalisation.
Yong concluded: "As part of the Regional Comprehensive Economic Partnership (RCEP) — the world's largest trade bloc, encompassing ASEAN, China, Japan, South Korea, Australia and New Zealand — Malaysia continues to enjoy relatively low tariffs with most of its trading partners. As such, the impact of Trump's tariffs on Sabah's international trade and local economy remains very limited."
Sabah's State Finance Minister, Datuk Seri Masidi Manjun, said yesterday that Sabah expects to feel a significant impact after the United States recently imposed a 24% tariff on Malaysia. Masidi noted that markets and prices have fallen noticeably since the tariff was announced, adding that oil prices had dropped below $70 a barrel, which he described as "a major concern for Malaysia".
Source: The Star