KUALA LUMPUR (April 3): Malaysia announced on Thursday that it will negotiate with the US rather than retaliate with more tariffs against its third-largest trading partner.

The Ministry of Investment, Trade & Industry (Miti) is taking seriously the reciprocal tariffs announced overnight by the US and actively engaging with US authorities to seek solutions that uphold free and fair trade. Malaysia is also committed to strengthen trade ties with the US, it said.

"In line with this approach, Malaysia is not considering retaliatory tariffs,” Miti said in a statement.

The 24% reciprocal tariff, part of a broader US trade policy targeting countries with which it has large trade deficits, will take effect on April 9. Some goods, such as semiconductors, will be exempted.

In 2024, trade with the US, Malaysia’s third largest trading partner since year 2015, rebounded by 29.9% to RM324.91 billion compared with 2023. Trade with the country accounted for 11.3% of Malaysia's total trade, underscoring its importance to the nation's economy.

Malaysia maintains a trade surplus with the US, primarily exporting electronics, palm oil and machinery to the world’s largest economy. However, the US enjoys a trade surplus in services with Malaysia, with many American firms operating in Malaysia for decades. 

In the meantime, the National Geoeconomic Command Centre (NGCC), chaired by Prime Minister Datuk Seri Anwar Ibrahim, will assess the impact of the latest US tariff and develop strategies to minimise its effects on the economy and industries, Miti said.

"The NGCC’s key focus is to ensure Malaysia’s economy remains competitive in these volatile times," the ministry said.

Malaysia will also leverage the Trade and Investment Framework Agreement signed with the US to secure trade benefits and pursue a Technology Safeguards Agreement for high-tech cooperation in semiconductors, aerospace and the digital economy, Miti said.

To mitigate the impact, Miti said Malaysia is expanding exports to high-growth markets and leveraging free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.

Additionally, Malaysia will strengthen partnerships within Asean and enhance supply chain resilience by accelerating key industrial policies like the New Industrial Master Plan 2030 and the National Energy Transition Roadmap, Miti noted.

Miti is also engaging affected industries and exploring support programmes to help businesses adapt.

Overall, “Malaysia is facing this challenge from a position of strength and preparedness,” Miti said, citing diversified markets and strong demand for its exports. Domestic demand, the country’s main engine of growth, remains robust, the ministry added.

Bank Negara Malaysia most recently maintained its forecast for the economy to expand steadily between 4.5% and 5.5% for 2025, even as it flagged intensifying external headwinds amid international trade tensions.

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