New US tariff unlikely to spur price surge for M'sian gloves — HLIB

The latest 10% tariff is unlikely to trigger another round of price surges for Malaysian gloves as seen in late 2024, according to Hong Leong Investment Bank (HLIB).

The US government has imposed an additional 10% tariff on Chinese rubber gloves, effective from Feb 4, as part of its broader trade measures.

This move follows earlier tariff hikes under the Biden administration, which saw duties on medical and surgical gloves jump from 7.5% to 50% in January 2025, with a further increase to 100% in 2026.

In a note on Monday, the research house noted that unlike the rush from mid-September to late 2024, when US distributors shifted supply chains to Malaysia, this transition is now mostly complete. 

Now that supply chains have stabilised, pricing pressures have eased, leading to more stable average selling prices.

Additionally, even if all Chinese medical rubber gloves were redirected to Malaysia, the resulting demand boost would translate into just 7% to 9% of Malaysia’s total glove supply in 2025, representing a modest 4% increase from 2024 levels. 

Therefore, any impact on pricing is expected to be minimal. 

While the tariff could provide short-term opportunities, long-term market share gains are less certain, said HLIB. 

This is because Malaysian glove makers may have limited opportunities to benefit from growing US demand, as Chinese manufacturers redirect their focus to Europe and Asia.

The house noted that Hartalega Holdings Bhd (KL:HARTA) and Kossan Rubber Industries Bhd (KL:KOSSAN) stand to benefit as preferred suppliers to US buyers, thanks to their strong reputations and absence of withhold release orders from US customs.

Kossan is the sole glove maker with a ‘buy’ rating and a target price of RM3, supported by its ongoing price-earnings rerating.

All in all, HLIB maintained its 'neutral' outlook on the sector, noting that much of the tariff impact had already been priced into earnings expectations.

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