MALAYSIA is seeking to secure a strategic trade breakthrough with the United States ahead of the ASEAN Summit in October, with both countries now in advanced stages of negotiations over a reciprocal agreement that could eliminate tariffs on a range of Malaysian exports, including palm oil, cocoa, and high-value manufacturing components.
The United States has agreed to consider unilateral zero-tariff exemptions for products that it does not produce domestically, in response to proposals put forward by Malaysia, according to Mastura Ahmad Mustafa, Malaysia’s Chief Negotiator for the talks.
“The US is also considering zero tariffs for furniture, automotive parts and components, as well as aerospace parts and components,” she told Bernama in an exclusive interview.
She added that the US delegation had indicated its openness to these exemptions during a series of earlier negotiation rounds.
“As stated, we are currently in the process of refining the Reciprocal Trade Agreement. Starting yesterday, we began organising several virtual sessions with the US to finalise the agreement,” Mastura said.
“During these negotiations, the US expressed willingness to consider exemptions for products that, in their view, cannot be domestically produced in the US. For such goods, they are prepared to consider unilateral tariff exemptions — meaning zero tariffs,” she added.
The agreement is expected to be concluded by October, ahead of President Trump’s visit to Kuala Lumpur for the ASEAN Summit, where both countries aim to showcase progress on bilateral trade cooperation.
The New Straits Times cited IPPFA Sdn Bhd director and economist Mohd Sedek Jantan saying the significance of concluding the deal ahead of the summit, warning that delays could expose Malaysia to tariff hikes and weaken its international negotiating stance.
“Securing the agreement before the summit is not just tactical but a strategic necessity, as the US has increasingly adopted a ‘first-mover advantage’ in trade policy,” he said.
“The US rewards those who conclude deals early, while leaving laggards vulnerable to punitive tariffs and heightened scrutiny. In that context, timing is everything,” he added.
Sedek warned that postponement could deepen structural vulnerabilities and harm Malaysia’s export performance, particularly in sectors heavily reliant on access to the US market.
The Minister of Investment, Trade and Industry, Tengku Datuk Seri Zafrul Abdul Aziz, recently confirmed that Malaysia and the US are targeting finalisation of the agreement before the October summit. He had held bilateral discussions with US Trade Representative Jamieson Greer, who was in Kuala Lumpur for the 57th ASEAN Economic Ministers’ Meetings.
Meanwhile, Bank Muamalat Malaysia’s chief economist, Dr Mohd Afzanizam Abdul Rashid, described the developments as encouraging, noting that ongoing reductions in tariff levels signal a serious commitment on both sides.
“When tariffs are reduced from 25 per cent to 19 per cent, that signals both sides are serious. It is a live negotiation, but this is a positive indication that a middle ground can be achieved, potentially invigorating bilateral trade in terms of income and investment between Malaysia and the US,” he said.
Dr Afzanizam also pointed to non-tariff barriers, particularly halal certification for US meat exports, as an area of mutual interest.
“Halal certification has posed a challenge for US meat exporters seeking access to the Malaysian market. If resolved, American farmers could enter new markets, while Malaysia would benefit from a broader supply of imported meat, potentially lowering prices,” he said.
Sedek also noted that early agreement could provide insulation for Malaysia’s semiconductor and pharmaceutical industries, shielding them from potential tariff reviews driven by US national security concerns.
“Delays risk leaving those industries at the mercy of Washington's security-driven reviews. A pre-emptive agreement would lock in tariff ceilings and carve-outs for strategic sectors such as semiconductors and pharmaceuticals, providing exporters with insulation that rivals like Vietnam have not secured,” he said.
With the US absorbing nearly 15 per cent of Malaysian exports — valued at more than US$43 billion last year — a timely agreement could preserve billions in trade value and reinforce Malaysia’s image as a dependable and agile economic partner.
Sedek further emphasised the broader diplomatic value of the agreement, saying it would send a strong message of leadership to ASEAN peers.
“Under the banner of ‘Inclusivity and Sustainability’, Malaysia can act as a bridge-builder between national interests and regional priorities,” he said.
He added that by championing initiatives such as a proposed ASEAN–US summit, Malaysia enhances not only its own soft power but also strengthens ASEAN’s collective bargaining position amid growing US–China rivalry.
“This enhances not only its own soft power but also the bloc’s collective bargaining position, encouraging peers to view bilateralism as a tool for strengthening rather than diluting ASEAN cohesion.” - September 26, 2025
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