Malaysia's strategic diplomacy delivers results, US drops tariff to 19 pct

KUALA LUMPUR: The United States' decision to reduce tariff on Malaysian exports to 19 per cent from 25 per cent is a significant achievement and stems from Malaysia's thorough and methodical negotiating process, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.

AI Brief

Malaysia upheld key policy positions during US tariff talks, securing a 19% rate aligned with regional peers.
MITI will use free trade agreements, industrial reforms, and outreach to cushion the tariffs impact on exports.
Despite global uncertainties, Malaysia remains resilient with strong domestic demand and strategic economic planning.

Tengku Zafrul emphasised that Malaysia had stood firm on various "red line" items, and the 19 per cent tariff rate was secured without compromising the nation's sovereign right to implement key policies supporting socio-economic stability and growth.

"This positive outcome follows sustained engagement between both governments through various bilateral platforms and reflects the high degree of Malaysia-US complementarity in trade and investment for over 60 years," he said in a statement.

He also noted that the reduced rate is broadly in line with other Southeast Asian countries.

The Malaysia-US tariff negotiations started on May 6 and concluded on July 31, 2025.

Tengku Zafrul added that Investment, Trade and Industry Ministry (MITI) has been working closely with Bank Negara Malaysia to assess the impact of different tariff levels on Malaysia's gross domestic product.

"In managing the impact of the 19 per cent tariff, MITI will continue to collaborate with relevant ministries and agencies to mitigate its effects on exports, encourage exporters to fully utilise Malaysia's 18 free trade agreements, and further diversify and expand export markets. At the same time, we will continue implementing industrial reform programmes," he said.

"This aligns with key national policies such as the New Industrial Master Plan 2030, the Green Investment Strategy, and the National Semiconductor Strategy, all of which are aimed at helping Malaysian companies transform operations by enhancing efficiency, embracing automation, and boosting overall productivity," he added.

On the global economic outlook, he acknowledged that it has become increasingly uncertain since March 2025, driven by shifting trade policies, tariff uncertainties, and rising geopolitical tensions.

"As an open, trading economy, Malaysia's growth prospects are closely linked to these external risks. Nonetheless, MITI has consistently emphasised that Malaysia is confronting these challenges from a position of strength and resilience, with robust domestic demand supported by ongoing policy measures and sustained industrial and economic reforms," he said.

He also said that MITI and relevant ministries and agencies will conduct targeted outreach programmes in the coming months on the implementation of the revised tariff rate for Malaysian exports to the US market.

-- BERNAMA