PETALING JAYA: Malaysia’s decision to sign the Malaysia–US Agreement on Reciprocal Trade was a calculated move to shield the country’s economy from sweeping unilateral tariffs imposed by Washington, not a pursuit of a flashy new trade deal.
According to the Investment, Trade and Industry Ministry, Malaysia’s sovereignty and policy autonomy were fully protected throughout the negotiations.
Amendments to local laws were required as a pre-condition for the agreement, which affirms Malaysia's sovereignty in the process.
The ministry said the agreement, known as ART, was not a conventional free trade pact initiated by Malaysia but rather a measure to protect local jobs and maintain access to the United States, its top export market.
During negotiations, Malaysia remained steadfast on key areas involving Bumiputera policies, government procurement and sectors such as energy and telecommunications, ensuring there were no clauses that overruled these policies.
Detailed assessments on economic, security and other aspects were carried out months before the agreement was finalised. The ministry said Malaysia would have likely faced higher tariffs, broader product coverage and greater uncertainty for exporters and investors without the deal.
To ensure transparency, the ministry held at least 10 engagement sessions with policymakers between May and Oct 2025, including with the Backbenchers Club, the Special Select Committee on international relations and international trade, ministerial statements in Parliament and meetings with the Opposition. Various ministries and agencies were consulted to ensure alignment with Malaysian laws and regulations.
In 2024, Malaysia–US trade reached RM325bil, with exports making up RM198.65bil. From Jan to Sept 2025, Malaysia exported RM166.38bil worth of goods to the US.
Without ART, these exports could have been hit with tariffs of up to 25%, with escalation likely in sensitive sectors such as semiconductors and pharmaceuticals.
Semiconductor exports alone are valued at over RM56bil and support thousands of businesses and millions of Malaysian workers.
The agreement led to a favourable outcome, with the reciprocal tariff rate on Malaysian products reduced from 25% to 19%, the lowest among Asean countries with trade surpluses with the US.
Malaysia also secured exemptions on 1,711 tariff lines, protecting RM22bil in exports involving palm oil, rubber, cocoa, aerospace components and pharmaceuticals.
With the export sector supporting 1.1 million jobs and at least 7,000 small and medium enterprises, the agreement provides assurance to businesses and investors at a time of volatile global trade.
The ministry said the agreement helps maintain Malaysia’s position as a reliable and resilient trading partner and welcomes genuine discussions or fact-based discourse on sovereignty and related concerns.
