Alicia García Herrero sees a near-term benefit from divided government but says energy risks and US technology restrictions on China remain, with limited scope for further tariff relief for Malaysia.
By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Nov 5 – The US midterm outcome offers Asia some near-term relief, but Malaysian exporters should not expect a substantial easing of tariffs or assume that the region’s energy and supply-chain risks have receded, Natixis Chief Eeonomist for Asia Pacific and the Middle East at Natixis CIB, Alicia García Herrero said.
Natixis Corporate & Investment Banking is the global corporate and investment banking arm of Groupe BPCE, the second-largest banking group in France.
In written responses to TNS News, García Herrero who is based in Hong Kong said: “Democratic control of the next Congress could constrain President Donald Trump’s trade and military policies. It would not resolve the underlying tensions between Washington and Beijing or guarantee safer energy shipments.
“A Democratic Congress is a net positive for Asia and the world near-term: it clips Trump’s freest tariff and escalation wings and raises the odds of some pressure to wind down the Iran conflict,” she said.
Even so, she described Asia as facing “a higher-cost, higher-friction world”.
Malaysia urged to diversify
For Malaysia, her central message was that businesses should concentrate on strengthening their competitiveness rather than waiting for a political opening in Washington.
“Meaningful further tariff relief is unrealistic,” she said. “Semiconductors are already largely protected; everything else faces a political environment that will not prioritise Malaysia.”
“Policymakers and exporters should stop waiting for Washington and double down on diversification, compliance, and moving up the value chain,” she added. “The window for easy relief has closed.”
Her semiconductor assessment has a policy context. On 13 October, Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said Malaysia’s semiconductor exports to the US remained exempt from tariffs and that the government had received no indication of a change at that time, Bernama reported.
That statement described the position then; it did not guarantee that future US measures would leave the sector unaffected.
Lower oil prices do not settle the risks
Brent fell below US$100 a barrel after the election, but García Herrero said her assessment of the Iran conflict’s inflation and growth risks was unchanged.
“Markets are too quick to treat any oil dip as durable relief,” she said. “Nothing in the midterms forces a real settlement or reliable shipping.”
“I only believe easing is sticky if Tehran’s exports recover meaningfully and the waterway stays open without constant threat of re-closure,” she said. “Until then the inflation and growth drag stays in the base case.”
Shipping risks persist despite a partial recovery in regional exports. Reuters, citing Vortexa data, reported that Gulf exports of crude, condensate and refined products excluding LPG averaged 17.1 million barrels a day in October, roughly three-quarters of pre-war levels. Those regional figures are distinct from Iranian exports, one of the indicators García Herrero identified.
China technology curbs likely to persist
García Herrero expects greater continuity in US technology restrictions on China than in the debate over broad tariffs.
Divided government could slow additional broad tariffs, she said, while technology restrictions would continue and probably become tougher.
“That consensus is bipartisan and deep,” she said.
She argued that ASEAN’s role as an alternative production base would therefore remain subject to scrutiny over the origins of goods and manufacturing capacity. Diversifying production into Southeast Asia would not remove companies’ exposure to US–China tensions.
No growth upgrade on the election alone
For Asia’s 2027 growth outlook, García Herrero’s assessment was “still decent, still slowing”.
“Tech demand and domestic buffers keep the region resilient; energy costs and residual tariff noise keep it from accelerating,” she said. “No reason to upgrade the outlook just because Congress changed hands.”
She said investors were underestimating how little the result changed Asia’s exposure to US–China technology decoupling and the energy shock. She also cautioned against assuming that political gridlock necessarily makes policy more predictable.
“Gridlock can also produce more erratic, not less, behaviour,” she said.
Democrats have secured enough election victories to control both chambers in the Congress that convenes on 3 January 2027. That gives them influence over legislation, spending and oversight, while Trump retains the presidential veto and executive powers.
For García Herrero, the result changes the political balance without removing the pressures shaping Asia’s business environment. Her advice to Malaysia remains focused on market diversification, compliance and higher-value production.
- TNS NEWS