Malaysia stands firm on sovereignty in US tariff talks – Tengku Zafrul (UPDATED)

MALAYSIA will not compromise on matters of national interest and sovereignty during its ongoing negotiations with the United States over newly announced tariffs, Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz said on Tuesday.

Speaking at a press conference, Tengku Zafrul said, “The goal has remained clear – to secure our export market access, modernise our economy and safeguard Malaysian livelihoods for the long term.”

He emphasised that there are certain “red lines” Malaysia would not cross in the talks, as the country seeks a resolution that is both fair and mutually beneficial.

The United States announced on Monday that it would impose a blanket 25 per cent tariff on all Malaysian exports to the US, effective 1 August 2025 – an increase from the earlier proposed rate of 24 per cent in April. However, US President Donald Trump signalled that Malaysian-based companies could circumvent the new tariffs by relocating manufacturing operations to American soil.

Tengku Zafrul confirmed that discussions with the US Trade Representative were ongoing, with both sides agreeing to continue talks ahead of the 1 August deadline. He acknowledged delays in resolving all key issues but remained hopeful.

“There are challenges, of course, there are issues that we still need to resolve. Many have been resolved but unfortunately not according to the timeline that was set... with the announcement by President Trump, we have a few more weeks of extension to negotiate on the final terms,” he said.

A significant sticking point remains Malaysia’s sizeable trade surplus with the US, which stood at around US\$25 billion last year. Washington is reportedly pressing for this to be narrowed.

“The US administration wants to see this reduced, and also in areas where they feel that there are red tapes on certain products, such as agriculture (and) halal. So these are issues which we need to address. We're still discussing, of course, there are red lines as well,” Tengku Zafrul said.

Key sectors like semiconductors, where both nations stand to benefit, remain a priority.

“Malaysia is a key player in the semiconductor sector, which supports the supply chain for the US semiconductor ecosystem. So, we need to continue the discussion,” he said during a virtual session at the REUTERS NEXT Asia forum.

“I am optimistic, especially in sectors where I feel there is a win-win (factor) and they complement each other.”

The negotiations have also addressed concerns such as digital taxation and potential threats to Malaysia’s local industries from certain imports.

“So these are things which we are still negotiating on, but most of the issues, external issues, have been resolved. I believe that the time given, namely 1 August, will give us more avenues to resolve issues that have yet to be addressed,” Tengku Zafrul added.

Malaysia has been in active negotiations with US officials since April, with the most recent round held on 18 June. -  July 9, 2025