KUALA LUMPUR – Malaysia’s Investment, Trade and Industry Minister Tengku Zafrul Aziz said on May 27 that a US proposal to reduce baseline tariffs to 10 per cent would be viewed positively by Kuala Lumpur, acknowledging that a previously anticipated zero-duty rate now seems unlikely. Speaking during a Bloomberg TV interview on the sidelines of a regional summit, Zafrul noted that Washington has made it clear the 10 per cent rate is effectively the minimum.
“To be fair, and the US has also been public about this, that the 10 per cent is not negotiable – it seems to be the floor,” Zafrul said, adding that any reduction from the previously floated 24 per cent or higher levels “would be good for our industries and for our exporters.”
Malaysia had been engaged in bilateral talks aimed at softening tariff impacts, which were announced by US President Donald Trump in May as part of a sweeping trade policy targeting several nations. In exchange for tariff relief, the US is demanding that Malaysia address trade imbalances, ease non-tariff barriers, and tighten safeguards to prevent American technologies and investments from being diverted to third parties, particularly China.
The US ran a US$24.8 billion goods trade deficit with Malaysia in 2024, according to the US Trade Representative’s Office. Southeast Asian economies, including Malaysia, are among those most vulnerable to Trump’s proposed tariffs, with some products facing duties as high as 49 per cent. However, these have been temporarily paused for 90 days as negotiations continue.
Zafrul confirmed that Malaysian negotiators will return to the discussion table next week and stressed the importance of securing a balanced outcome. “What’s important for us is to try and come to a win-win solution,” he said, noting the US remains Malaysia’s top export destination and its largest foreign investor.
The ongoing regional summit in Kuala Lumpur, which began on May 26, has seen Southeast Asian leaders intensify engagement with China and Gulf nations in an effort to cushion the region from the economic fallout of any future tariff hikes. Malaysia has also initiated free trade agreement negotiations with the Gulf Cooperation Council as part of its broader diversification strategy.
In line with US concerns about trans-shipment, particularly of semiconductors to China, Malaysia is stepping up enforcement measures. Effective May 6, the Investment, Trade and Industry Ministry became the sole issuer of all non-preferential certificates of origin for US-bound shipments. Zafrul said the new regulations have been implemented smoothly, adding that Malaysia has increased capacity and resources to prevent delays for exporters.
“We do not have bottlenecks for the exporters to export to the US,” Zafrul concluded, reaffirming Malaysia’s commitment to maintaining strong and compliant trade relations with Washington.