MALAYSIA’S final import tariff exposure to the United States remains unclear as Washington continues its probe into overcapacity issues, with the outcome expected to determine whether further duties will be imposed on Malaysian exports.
Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said any additional tariff arising from the investigation would be combined with the existing 10 per cent levy imposed over concerns related to forced labour practices.
He said the current tariff had not weakened Malaysia’s competitiveness as all countries exporting to the US were facing tariff measures, with Malaysia among those receiving one of the lowest rates.
“At present, the rate for the forced labour issue is 10 per cent. We still do not know the rate for the overcapacity issue as the investigation is still ongoing. Once the rate is determined, it will be added to the existing rate and that will be the tariff imposed on our country,” he said.
Johari made the remarks after attending the 50th Annual General Meeting of the National Chamber of Commerce and Industry of Malaysia (NCCIM).
He said Malaysia had secured a relatively lower tariff rate compared with several US trading partners, including Singapore and 40 other countries, due to the country’s existing legal framework aimed at protecting workers from forced labour exploitation.
“Companies or industries that use forced labour, fail to comply with International Labour Organization (ILO) standards and are involved in forced labour practices can face action because we have relevant laws.
“However, our weakness is that we do not have laws protecting the country from imported goods produced using forced labour, which are then brought in as inputs before being processed into Malaysian products.
“US investigations found that some of these components were believed to have been produced through forced labour practices,” he said.
Johari said Malaysia was now preparing specific legislation to regulate imported goods linked to forced labour practices, particularly products used as inputs in local manufacturing processes.
He said the move had helped Malaysia secure the lowest additional tariff rate of 10 per cent among countries affected by the forced labour issue, as Washington recognised the measures being undertaken by the government.
The minister added that Malaysia would introduce two new laws addressing forced labour involving third countries and overcapacity concerns following the implementation of the US import tariff measures.
He said the US had granted Malaysia a two-year transition period after ratification of the reciprocal trade agreement (ART) to establish and strengthen the necessary legal framework.
Malaysia committed to introducing the required legislation under the ART agreement signed in October last year, which is currently awaiting ratification.
“Our laws are being prepared, and we are still seeking more details. After the investigation into Malaysia’s capacity is completed, we can then introduce the legislation because overcapacity also requires laws to be established.
“That is why the US gave us two years to create the laws. Two years does not mean immediately. Under the agreement that has been signed and after we ratify the agreement, it means they have given us two years to strengthen laws that we currently do not have,” he said.
Johari stressed that strengthening Malaysia’s regulatory framework was necessary to ensure the country’s exports to the US remained protected from future trade disruptions.
“It does not apply to any particular economy only. It is not necessarily just China or any other country in the world because as long as a country falls under the category of forced labour practices, if we do not take action and do not implement measures, we will also be affected,” he said.
Currently, electrical and electronics products, which contribute nearly half of Malaysia’s exports to the US, are exempt from the new tariff measures.
Malaysia’s exports to the US increased by almost 55 per cent to RM173 billion in the first six months of the year, with the country’s largest export market accounting for nearly 18 per cent of total exports.
The US overtook Singapore and China during the period to become Malaysia’s leading export destination. - July 25, 2026
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