KUALA LUMPUR (July 10): Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz said non-tariff barriers are a key issue in talks with the US and refuted claims that trade talks between the two countries had collapsed, despite the higher tariff of 25% that has been slapped on Malaysian goods.

Zafrul said talks have only been “extended” because the new tariff starts on Aug 1, and he is hopeful a deal can be reached in the coming weeks.

Negotiations focus on three main areas: Industrial products, agricultural products, and non-tariff barriers. Progress has been made on industrial and agricultural products, with Malaysia meeting nearly all of US requests. However, non-tariff barriers remain a challenge and need more time to resolve.

Zafrul said, during a press conference on the trade talks, there’s more than a 50% chance of closing a deal, but time is tight. Some issues require diplomatic talks, and the final decision rests with the US president. The ministry is working closely with other local agencies and US departments to address outstanding issues.

Some key sticking points involve “red lines” tied to Malaysia’s national interests, like halal certification, which affects US beef and poultry exports. Other non-tariff barriers include digital trade and government procurement.

“The key takeaway is that we stood firm on what we needed to stand firm on,” Zafrul said. “For every single commitment negotiated, we always asked ourselves, ‘On balance, would it be better to have a lower tariff by opening up our market unconditionally on certain products?’"

He noted the 90 days were insufficient for the ministry to finalise a deal, citing that only two countries — the UK and Vietnam — were able to do so during the window.

"We were actually in the midst of asking for an extension, and that’s the truth, because we still have a few outstanding issues that we are waiting for the relevant ministries to meet the relevant departments in the US,” he said.

The ongoing negotiation with the US will mainly address unresolved issues, as well as other matters on industrial and agricultural products, non-tariff barriers, labour and environmental standards, and economic security.

Sector-specific negotiations include semiconductors, electrical and electronics, plastics, aluminium, medical devices, automotive, poultry, dairy and alcohol — most of which are Malaysia’s major export items to the US.

Specifics were not revealed, as Zafrul noted non-disclosure agreements were inked for negotiations.

In April, along with Trump’s tariff move, the US Trade Representative released a 2025 report listing trade barriers faced by US exporters. These include tariffs and non-tariff issues on alcohol, poultry, beef, government buying preferences, intellectual property, internet rules, and local equity rules (Bumiputera requirements).

A key question remains about why the new US tariff on Malaysian goods was raised to 25%, up from the 24% announced in April. Trade Minister Zafrul said the reason for the 1% increase is unclear, noting that even the US Trade Representative couldn’t explain it — the decision lies solely with Trump.

Nonetheless, the minister downplayed the increase stating an “1% [increase] is not a big number — we are still lower than our neighbouring countries such as Thailand, Indonesia, and so on," but acknowledged Vietnam’s lower rate of 20% via its trade deal with the US.

He did clarify the 25% tariff does not include the additional 10% Trump threatened countries aligning with BRICS’ “Anti-American policies”.

Zafrul said he will hold a video call with US Trade Representative Jamieson Greer on Thursday and also join a meeting between Prime Minister Datuk Seri Anwar Ibrahim and US Secretary of State Marco Rubio.