Malaysia dodges tariff hikes with U.S. trade pact - Tengku Zafrul

He said the deal, inked on Sunday, slashed tariffs on Malaysian exports from 25% to 19%, with 1,711 tariff lines worth RM22 billion removed.

“If the Reciprocal Tariff Agreement (ART) is not signed soon, Malaysia risks the United States government reinstating the original tariff rate of 24%, or imposing much higher rates, 30%, 40%, 50%, or even 100%.

"We know that the United States is capable of taking such action, as has been proven in its negotiations with other countries," he told the parliament on Wednesday.

He added that such increases would deal a heavy blow to Malaysia’s export sector.

"Who will bear this burden? Who will suffer losses and see our companies close down? And who will lose their jobs and sources of income? Malaysians will.”

Under the agreement, Malaysia will open its market to U.S. goods such as chemicals, machinery, vehicles and farm produce, while the U.S. maintains a 19% reciprocal tariff on Malaysian exports, with some items enjoying zero tariffs.

Malaysia also agreed not to restrict exports of critical minerals or rare earth elements to the U.S. but retained control over key national policies, he said.

Tengku Zafrul also said Malaysia’s negotiators stood firm on Bumiputera rights, government procurement and strategic sectors like energy and telecommunications, rejecting any terms that crossed the nation’s “red lines”.

His remarks followed Perikatan Nasional secretary-general Datuk Azmin Ali’s claim that the deal forces Malaysia to follow U.S. trade sanctions and erodes its economic sovereignty.

On Monday, Azmin accused the agreement of threatening Malaysia’s economic sovereignty, alleging that it compels Putrajaya to adhere to Washington’s trade and investment policies.

The former trade minister also singled out Article 5.1 as particularly harmful, claiming it obliges Malaysia to mirror any U.S.-imposed trade restrictions or sanctions on other nations.

In a Facebook video last night, Tengku Zafrul slammed Azmin for cherry-picking the text, saying Malaysia is only obliged to act when both countries share economic or security concerns.

“If an issue affects only the U.S. and not Malaysia, we have no reason to follow. That’s the clear meaning of the word ‘shared’,” he said.