The trade war between the United States of America and the People’s Republic of China has caused major worry to the global economic landscape. This includes Malaysia, which is a trading partner of both states. The conflict, as it escalates day to day, it causes a spill over effect to Malaysia, as a major trading partner. Based on that, this research aims to study the impact of the trade war on Malaysia’s economy. After scrounging various literature, it can be seen that there are positive and negative impacts. This includes the occurrences of trade diversion, the relocation of firms and a high influx of Foreign Direct Investment. In supporting the literature, the research is done through content analysis which managed to produce three positive impacts and two negative impacts. The positive impacts of the conflict to Malaysia’s economy include trade diversion, relocation of firms and business, and lastly an influx of FDI. As for the negative impacts, some parties used Malaysia as a location to circumvent tariff, which causes the occurrences of transshipment and dumping. Thus, this research concludes that there are positive and negative impacts of the event towards Malaysia’s economy, despite it is minimal as the trade war is still ongoing.
