KUALA LUMPUR (Feb 24): Malaysia’s goods are estimated to face a lower effective tax rate with the US Supreme Court’s decision to strike down President Donald Trump’s reciprocal tariffs, according to Maybank Investment Bank economists.
In a note on Tuesday, while Maybank IB anticipate the effective rate for the country will settle at 14.3%, the relative tariff positioning remains broadly unchanged within Asean.
Currently, Malaysia’s effective rate is below those of Indonesia, Vietnam, Thailand and the Philippines, but it is still above the global 15% headline rate due to product-specific duties on certain exports.
The current effective US tariff rate is 15.6%, while the overall rate is 19%, according to Maybank IB.
“The Supreme Court’s strike down of IEEPA tariffs introduces more uncertainty into the tariff-related developments in 2026. Nonetheless, it does not materially disrupt Asean’s economic outlook,” said the research house, referring to the International Emergency Economic Powers Act.
Maybank IB said that while the new global rate is set at 15%, exemptions remain in place for key product categories that account for a significant share of Malaysia’s exports to the US, which includes semiconductors, electronics and pharmaceuticals segments.
Singapore continues to face the lowest effective US tariff rate in the region, largely due to a higher share of exempted exports, while countries such as Indonesia, Vietnam and Cambodia face higher effective duties because a larger portion of their exports are subject to product-specific tariffs.
Last week, the Supreme Court ruled that Trump did not have the legal authority to impose reciprocal tariffs under the IEEPA. Following the decision, the US administration announced a blanket tariff under Section 122, first at 10% and subsequently raised to 15%.
US Customs has since halted the collection of tariffs deemed illegal from Feb 24 onwards.
The research house maintained its gross domestic product forecasts for Malaysia and other Asean economies under its coverage, arguing that the “pecking order” of tariff competitiveness remains intact despite narrower differentials with China.
It added that the broader China+1 supply chain diversification strategy is unlikely to change, as companies continue to prioritise resilience amid heightened trade policy volatility. Key Malaysian export sectors, particularly in electronics, are expected to remain supported by tariff exemptions and ongoing global investment in artificial intelligence-related infrastructure.
Maybank IB also highlighted other legal tools that the US administration could use to rebuild its tariff framework, including Section 301 investigations into unfair trade practices and Section 232 national security probes. However, this would take months to implement.
Due to this, the research house places caution on product-specific exemptions, including those related to pharmaceuticals and other strategic sectors, which could come under review following ongoing investigations.
While Section 122 tariffs can only remain in place for up to 150 days unless extended by US Congress, Maybank IB expects any future US tariff actions to be more targeted rather than broad-based, even as uncertainty over trade policy persists.