Malaysia could gain an additional 10 per cent share of the US medical glove market. - Photo: Bloomberg
KUALA LUMPUR: The escalating US-China trade war appears to present an opportunity for Malaysian glove manufacturers to establish a firmer footing in the US market.
Malaysia, the world’s largest rubber gloves producer, could gain an additional 10 per cent share of the US medical glove market following fresh tariffs that Washington has slapped on all Chinese imports, analysts say.
The sweeping order from President Donald Trump that came into effect on Feb 4, less than a month after his return to the White House, imposes an additional 10 per cent tariff on all products made in China, including laptops, fast fashion, toys and medical gloves.
Already, China-made gloves have been subjected to a slew of tariffs. In September 2024, Trump’s predecessor Joe Biden’s administration raised the levy for Chinese medical and surgical gloves to 50 per cent from Jan 1, 2025, and to 100 per cent in 2026.
Taking into account the Trump 2.0 administration’s latest salvo, China’s glove makers will be facing higher tariffs of 60 per cent in 2025 and 110 per cent in 2026. What this means is that China’s products will be far less competitive in the US market.
As such, the recent round of tariffs could see US distributors pivoting from Chinese glove manufacturers to source from Malaysian producers instead, said UOB Kay Hian research analyst Jack Goh.
“Malaysia can capture at least another 10 per cent share of the US (medical) glove market, given the new US tariffs on China,” Goh told The Straits Times.
Malaysia is the world’s leading producer of rubber gloves with around 45 per cent market share in 2024, followed by China with about 28 per cent, data from the Malaysian Rubber Glove Manufacturers Association shows.
As of December 2024, China-made gloves accounted for 42 per cent of US medical glove imports, while made-in-Malaysia gloves comprised 44 per cent.
Annual consumption of medical gloves in the US is projected at about 90 billion to 100 billion pieces in 2025, from 70 billion to 75 billion pieces in 2023, said Goh.
With the latest round of US tariffs on Chinese products, Top Glove said it is confident of eventually capturing a quarter of China’s medical glove market share in the US. Currently, 20 per cent of the company’s total glove exports go to the US.
Overall, Malaysia’s glove makers stand to gain between US$55 million (S$74 million) and US$56 million per year in sales, for every 10 percentage-point share of the US medical glove market that China loses, according to RHB Research.
Even before the new US levies on all Chinese imports took effect Feb 4, Malaysian glove makers such as Top Glove had already started to benefit from a rise in orders from the US.
Top Glove, the world’s biggest glove manufacturer with 26 per cent of the global market share, announced a return to profitability with net earnings of RM5.5 million (S$1.7 million) for the first fiscal quarter ended Nov 30, 2024, reversing its net loss of RM57.7 million in the previous corresponding period.
Malaysia’s glove sector is set to see a strong demand recovery in 2025, driven by restocking efforts and rising average selling prices, according to Kenanga Research.
In a recent industry report, the firm projects a 12 per cent rise in global glove demand to 368 billion pieces in 2025.
Going forward, glove prices are not only set to rise, but should favour Malaysian glove makers over Chinese producers, analysts and glove makers note.
Prior to the earlier 50 per cent tariff imposition by the US on Chinese rubber gloves in September 2024, China-made gloves were selling for about US$15 per carton containing 1,000 pieces.
The latest imposition of an additional 10 per cent tariff is estimated to raise the average selling price of Chinese gloves further to US$25.60 per carton.
In comparison, Malaysian gloves, which were sold at the US$17 to US$18 range per carton prior to the 50 per cent tariff imposition, are currently priced at US$20 to US$21 per carton.
For now, Malaysia’s glove makers appear best placed to benefit from US tariffs on Chinese imports, analysts say. But the boon may be short-lived, given the vagaries of world trade and competing interests.
In further developments, Trump rolled out his plan on Feb 13 for reciprocal tariffs on US trading partners to match the rates they levy on imports, as he hopes to eliminate any trade imbalances.
Malaysia’s main export partners in 2024 were Singapore, US and China. The US goods trade deficit with Malaysia was US$24.8 billion in that same year.
In any event, US consumers would be impacted the most if tariffs were also imposed on Malaysian glove producers, said the Top Glove spokesperson, as this would mean over 85 per cent of gloves supplied to the US, from Malaysia and China combined, would be more expensive.
“To mitigate geopolitical uncertainties, Malaysian businesses should diversify sourcing strategies, stock planning, front-loaded shipment, and logistics planning to avoid delay in revamping of supply chains,” said executive director Lee Heng Guie at Malaysian think-tank Socio Economic Research Centre.
Meanwhile, there are concerns over Chinese manufacturers setting up shop in South-east Asia, in a bid to circumvent the tariff imposition on China-made goods heading into the US.
This could cut short the stroke of good fortune for Malaysia’s glove makers, analysts say.
While Malaysia could gain from the trade diversion in its favour as a result of US tariffs on China-made imports, Lee noted that Chinese manufacturers using Malaysia as a base to “rebadge” goods to avoid the levies “could lead to more punitive tariffs imposed by the US on Malaysian products”. - The Straits Times/ANN
