Malaysia faces tariff test in Washington

MANY countries and their leaders are on tenterhooks as they seek to negotiate better tariff terms with the US government.

Next week, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz will travel to Washington to resume Malaysia’s negotiations.

Recall that on April 2, US President Donald Trump announced tariff measures affecting around 60 countries, including a 24% levy on most Malaysian goods. However, the tariffs have been temporarily suspended for 90 days for most countries to allow room for trade negotiations.

That suspension expires on July 8 – less than four weeks away. Minister Tengku Zafrul has a big task on his shoulders.

Notably he said this week that he hopes to secure tariffs below 10% for sectors important to Malaysian exporters, and also sectors of strategic interest to the US economy.

Malaysia has expressed its readiness to negotiate in four key areas: narrowing the trade deficit, addressing non-tariff barriers, strengthening technology protection and security, and exploring the potential for a bilateral trade agreement.

Such negotiations are no easy task. The United States will likely want assurance that promises will be fulfilled. That, in turn, will require our government machinery to go into full force – changing regulations where needed and enforcing them effectively.

For example, the United States will need to be convinced that Malaysia is not being used as a gateway for US technology to reach countries under sanctions.

Another issue is transshipment, which can enable “origin-washing.” Malaysia is addressing these loopholes, which is a step in the right direction.

Meanwhile, even a 10% tariff on our local industries would be a hard pill to swallow – let alone if the tariff on Malaysia is higher than that.

It is also interesting to note that US Treasury Secretary Scott Bessent said this week that the Trump administration is prepared to further extend the tariff deadline for trading partners negotiating in good faith, even if no deal has yet been reached.

If so, it highlights just how important the Malaysian minister and his delegation’s upcoming trip to the United States will be.