On 2 April 2025, the President of the United States (“US”), Donald Trump, declared a national economic emergency, triggering a sweeping wave of tariffs aimed at resetting trade balances with the rest of the world.
 
In a fiery announcement from the White House Rose Garden, Trump revealed that the US would impose a minimum 10% tariff on all imports, with escalated rates for 60 countries identified as the “worst offenders.”¹ One of those countries is Malaysia, now facing a 24% tariff under the new regime.
 
“We will charge them approximately half of what they are and have been charging us, so the tariffs will be not a full reciprocal,” Trump said from the Rose Garden on Wednesday afternoon. “I could have done that, I guess, but it would have been tough for a lot of countries and we didn’t want to do that.” ²
 
Why Malaysia?
 
According to the reciprocal tariff chart Trump held during the announcement, it was alleged that Malaysia imposes a 47% tariff on US goods - a figure cited as the basis for the newly imposed 24% reciprocal duty.
 
Malaysia appeared 11^th on the chart of nations with the highest effective tariff barriers against the US, alongside several Southeast and South Asian countries. Other countries hit with steep tariffs include³:
 

However, the methodology used to derive this 47% figure was not disclosed during the announcement and remains unclear. It is speculated that this figure may comprise a combination of:
 

Additionally, the 24% tariff rate may have been influenced by the significant US trade deficit with Malaysia. In 2024, total US–Malaysia goods trade amounted to $80.2 billion. Of this, US exports to Malaysia totalled $27.7 billion, representing a 43.5% increase from 2023. Conversely, US imports from Malaysia reached $52.5 billion. This resulted in a trade deficit of $24.8 billion for the US in 2024, although the deficit had narrowed by 7.6% compared to the prior year⁶.
 
By contrast, countries such as Singapore⁷, Peru⁸ and Brazil⁹, which were subjected only to the baseline 10% tariff, maintained a positive trade balance in favour of the US. The trade surplus may partially explain the differing tariff treatment between countries.
 
While the rationale and the specific calculations of the tariff remain unclear, the move carries significant implications for Malaysia’s future trade relations and export strategy.
 
What Happens Next?
 

This development poses serious implications for Malaysian exporters, especially those in electronics, palm oil derivatives and furniture industries with significant US exposure. Nevertheless, it would be interesting to see how the Malaysian Government responds to these tariffs and how the situation evolves in terms of bilateral trade relations and realignment of trading relationships.
 
In its response to the US’s 24% “reciprocal” trade tariff, Malaysia’s Ministry of International Trade and Industry (“MITI”) said “Malaysia is not considering retaliatory trade tariffs” and is actively engaging with the US authorities to seek solutions that will uphold the spirit of free and fair trade. MITI added that Malaysia will “also utilise the Trade and Investment Framework Agreement (Tifa) to seek reciprocal trade gains and pursue a Technology Safeguards Agreement with the United States to facilitate high-tech cooperation in semiconductors, aerospace, and digital economy sectors.”¹⁰
 
To mitigate the tariff impact, MITI said Malaysia will expand its export markets by prioritising high-growth regions and leveraging existing free trade agreements (FTAs), including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP) and will foster new partnerships within Asean to enhance Malaysia’s supply chain resilience by accelerating the implementation of key industrial policies like the New Industrial Master Plan 2030 (NIMP 2030) and the National Energy Transition Roadmap (NETR).¹¹
 
Another measure being implemented by the Government is to engage with the affected industries, while exploring support programmes to help businesses adapt.¹²
 
Alert by Mr. Manshan Singh (Partner), Ms. Ho Pui Yan (Associate) or Ms. Lim Shu Yi (Associate) of the Anti-Dumping and Trade Remedies Practice of Skrine.

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