INTERACTIVE: Here’s what tariffs mean for Malaysia’s wooden-based furniture industry

By SHYAFIQ DZULKIFLI

PETALING JAYA: It will be difficult for Malaysia’s furniture industry to cushion the impact of US tariffs on wooden furniture by diversifying to other markets in the short term, say the industry players.

Muar Furniture Association (MFA) president Steve Ong said the United States remains Malaysia’s most important export destination, accounting for more than half of the country’s total wooden furniture exports.

“While we export to 160 countries, it is undeniable that the United States remains the largest consumer market.

“Singapore, the United Kingdom, and Japan are also Malaysia’s key export market but none come close to the scale and consistency of demand seen from the US,” he said.

Ong added that shifting reliance to other markets would require time, as well as government support and assistance.

According to Malaysia’s External Trade Statistics figures, the country exported RM8.68bil worth of wooden-based furniture in 2024, an increase by 7.43% from RM8.08bil the previous year. 

More than half of 2024’s exports was shipped to the United States amounting RM4.51bil, followed by Singapore (RM0.71bil) and the United Kingdom (RM0.46bil).

From January to August this year, wooden-based furniture exports dropped slightly by 2.74% to RM5.62bil, as compared to RM5.47bil in the same period last year.

Despite the overall decline, shipments to the United States moved in the opposite direction, rising 2.37% to RM2.94bil.

On Sep 29, Trump announced 10% tariffs on imported timber and lumber, and 25% tariffs on imported kitchen cabinets, bathroom vanities and upholstered furniture.

The tariff rates start on Oct 14, but the duties will increase on Jan 1 next year to 30% for upholstered wooden products, and to 50% for kitchen cabinets and vanities imported from countries that fail to reach an agreement with the United States.

According to data from the United States Census Bureau, Malaysia was the fifth largest supplier of wooden-based furniture to the United States last year, behind Vietnam (US$6.27bil), China (US$1.88bil), Canada (US$1.5bil) and Mexico (US$1.06bil).

The MFA said the new tariffs were expected to dampen demand from the market, with local furniture manufacturers likely to face pressure to absorb part of the cost to maintain competitiveness.

“Besides tariffs, we are also dealing with rising domestic costs such as higher SST, foreign labour EPF contributions and electricity rates, all of which could further weaken our international competitiveness,” the association said.

To ease the burden, it urged the government to introduce export tax rebates and automation subsidies for the furniture sector.

“These measures would help improve efficiency and maintain Malaysia’s competitiveness in the global market,” Ong said.

Meanwhile, Malaysian Furniture Council (MFC) president Desmond Tan expressed disappointment over the United States decision, saying Malaysia and the United States share a mutually dependent economic relationship.

He said the Investment, Trade and Industry Ministry is currently in talks with the United States to seek tariff exemptions for several products, including furniture.

“We remain hopeful for a positive outcome, but in the meantime, we urge the government to provide short-term financial assistance, tax relief, and export expansion incentives to help manufacturers navigate this challenging period,” Tan said.

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