U.S. and Malaysia Reach Agreement on Reciprocal Trade

Trade Update • Oct. 27, 2025

Key Points

• Malaysia will provide preferential market access for U.S. exports, including industrial goods such as machinery, chemicals, metals, passenger vehicles, and agricultural products like dairy, poultry, rice, and processed foods.
• The United States will maintain a 19% reciprocal tariff on most Malaysian goods, with selected products receiving a 0% tariff under Annex III of Executive Order 14346.
• Malaysia will remove non-tariff barriers, recognize U.S. safety and regulatory standards, streamline import licenses, and simplify halal and facility requirements for U.S. products.
• Malaysia commits to high environmental and labor standards, including enforcement against forced labor, child labor, illegal logging, illegal fishing, and wildlife trade.
• Major commercial deals include $3.4B annual LNG purchases, 30 Boeing aircraft with options for 30 more, $150B in semiconductors and data center equipment, and facilitation of $70B in U.S. investments over 10 years.

The U.S. and Malaysia have reached an Agreement on Reciprocal Trade to expand bilateral economic ties and create unprecedented access for exporters in both countries. The deal builds on the 2004 Trade Investment Framework Agreement and ensures U.S. goods face reduced tariffs and fewer regulatory barriers in Malaysia. It also sets clear standards for labor, environmental protection, digital trade, intellectual property, and national security cooperation. The agreement is expected to stimulate major commercial and investment opportunities while enhancing supply chain resilience.

Tariffs and Market Access

• U.S. Industrial and Agricultural Exports: Preferential access to chemicals, machinery, electrical equipment, metals, passenger vehicles, dairy, poultry, horticulture, processed foods, beverages, pork, rice, and fuel ethanol.
  
• Reciprocal Tariffs: 19% on most Malaysian goods, with selected products at 0% under Annex III.
  
• Quantitative Restrictions: Malaysia will not impose import quotas except as allowed under WTO rules.

Non-Tariff Barriers

• Technical Standards: Malaysia will accept U.S. safety, emissions, and regulatory standards for vehicles and industrial goods.
  
• Conformity Assessment: Malaysia will not require duplicative testing or certification beyond U.S./international standards.
  
• Food and Agriculture: Streamlined halal certifications, facility registration, and animal disease management to facilitate U.S. exports.
• Geographical Indications: Malaysia will protect terms only where quality, reputation, or characteristics are attributable to origin.

Labor and Environmental Commitments

• Labor Rights: Prohibition on forced and child labor; enforcement of labor laws in high-risk sectors; no weakening of existing protections.
  
• Environmental Standards: Effective enforcement against illegal logging, illegal fishing, fisheries subsidies, and wildlife trade; adoption of high environmental governance standards.

Intellectual Property and Digital Trade

• IP Protection: Malaysia will enforce civil, criminal, and border measures against piracy and counterfeiting; prioritize copyright and trademark enforcement.
  
• Digital Trade: No discriminatory digital services taxes; facilitate cross-border data transfers with protections; support a multilateral moratorium on customs duties on electronic transmissions.
• Technology Market Access: Malaysia will not require the transfer of proprietary technology or source code as a condition of doing business.

Commercial Deals and Investments

• LNG Purchases: Up to 5 million tonnes per year, valued at $3.4B annually.
  
• Coal and Telecom: $204.1M in total purchases.
  
• Aerospace: 30 Boeing aircraft purchased, plus an option for 30 more.
  
• Semiconductors & Data Centers: $150B in estimated purchases of semiconductors, aerospace components, and data center equipment.
  
• Critical Minerals: Malaysia to expand production of critical minerals and rare earths, including unrestricted sale of rare earth magnets to U.S. companies.
• Investment: Facilitation of approximately $70B in U.S. investments over the next 10 years, including greenfield projects in critical sectors.

Implementation

• According to a separate White House official announcement, The agreement will enter into force 60 days after completion of domestic legal procedures in both countries.
  
• Either party may terminate the agreement with 180 days’ notice.
• Modifications and amendments require written agreement and will enter into force 60 days after notifications.

How GHY Can Help?

GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.

By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.

Contact Us Today! Booking a Meeting, email consult@ghy.com, or call +1 (800) 667-0771.