MITI Welcomes Reduction of US Tariff on Malaysian Exports

1 August 2025

KUALA LUMPUR: The Ministry of Investment, Trade and Industry (MITI) welcomes the decision by the United States (US) Government to reduce its reciprocal tariff on Malaysian exports from 25% to 19%, effective 1 August 2025.

The Malaysia–US tariff negotiations, which commenced on 6 May 2025, were officially concluded on 31 July 2025.

This favourable outcome follows sustained engagement between both governments through various bilateral platforms and underscores the long-standing complementarity between Malaysia and the United States in trade and investment, which has spanned over six decades. The newly agreed 19% tariff aligns broadly with rates applied to other Southeast Asian nations.

Crucially, Malaysia held firm on a number of ‘red line’ issues during the negotiations. The final outcome was achieved without compromising the country’s sovereign right to implement critical policies necessary for safeguarding socio-economic stability and driving national growth. MITI considers this result a major achievement, reflecting Malaysia’s thorough and methodical approach to the negotiation process.

MITI Minister, Tengku Datuk Seri Utama Zafrul Abdul Aziz, stated:

“This decision by the United States reflects the strong and enduring economic ties between our two nations. It is also a testament to Malaysia’s credibility as a reliable trade and investment partner. We wish to express our appreciation to our US counterparts, especially the Office of the US Trade Representative and the Department of Commerce, for their constructive cooperation and support throughout the negotiation process.”

Throughout the negotiations, MITI worked in close collaboration with agencies such as Bank Negara Malaysia (BNM) to assess the potential impact of various tariff scenarios on Malaysia’s GDP. In managing the implications of the revised 19% tariff, MITI will continue to work closely with relevant ministries and agencies to mitigate the impact on Malaysian exports. At the same time, the Ministry will encourage Malaysian exporters to fully leverage the country’s 18 Free Trade Agreements (FTAs) in order to diversify and expand their export markets.

In parallel, MITI will advance its ongoing industrial reform agenda as outlined under national policies such as the New Industrial Master Plan 2030, the Green Investment Strategy, and the National Semiconductor Strategy. These reforms aim to support Malaysian businesses in transforming their operations through enhanced efficiency, greater automation, and improved productivity.

Furthermore, the Government will explore additional measures to assist Malaysian companies, particularly small and medium-sized enterprises (SMEs), in adapting to the new baseline tariff environment.

Since March 2025, the global economic landscape has grown increasingly uncertain, characterised by shifting trade policies, tariff volatility, and escalating geopolitical tensions.

As an open and trade-dependent economy, Malaysia’s growth prospects remain exposed to such external risks. Nonetheless, MITI maintains that Malaysia is approaching these challenges from a position of strength and resilience, supported by robust domestic demand, consistent policy support, and structural reforms that continue to sustain private consumption.

MITI will work closely with stakeholders to maximise the opportunities arising from this development, including the strong momentum in approved investments driven by ongoing infrastructure projects, a consistent investment realisation rate exceeding 85%, and catalytic national development initiatives.

The Ministry remains fully committed to defending Malaysia’s trade interests while deepening mutually beneficial partnerships with strategic economies such as the United States.

Malaysia will also continue to pursue industrial reform and strategic trade diversification to underpin long-term national growth.

MITI extends its sincere appreciation to all parties involved in the negotiation process, especially the Prime Minister, Dato’ Sri Anwar Ibrahim, the Prime Minister’s Office, various ministries and agencies, the American Malaysian Chamber of Commerce (AMCHAM), the US-ASEAN Business Council (USABC), as well as think tanks and industry representatives.

Their collective efforts were instrumental in shaping and finalising Malaysia’s best possible offer during the negotiations.

In the coming months, MITI, together with the relevant ministries and agencies, will undertake targeted outreach programmes to support the implementation of the revised tariff rate for Malaysian exports to the US market.

MITI looks forward to further strengthening bilateral trade and investment ties with the United States, Malaysia’s largest export market, valued at RM198.65 billion, and the leading source of foreign direct investment, with approved investments totalling RM32.82 billion in 2024.