PETALING JAYA: In recognition of a major milestone for Malaysia’s trade relations, the Federation of Malaysian Manufacturers (FMM) has lauded the Ministry of Investment, Trade and Industry for its unwavering effort in bringing the US-Malaysia Reciprocal Trade Agreement to fruition.
FMM president Tan Sri Soh Thian Lai said the association recognised that the discussions were exceedingly challenging and required careful balancing of Malaysia’s interests and evolving global trade pressures.
“FMM remains committed to working closely with the government and stakeholders to translate the agreement’s terms into tangible gains for the manufacturing base, including small and medium-sized enterprises,“ Soh said in a statement.
Under the agreement, the US will maintain a 19% tariff on Malaysian-origin goods, with significant exemptions for 1,711 tariff lines of Malaysian exports. These exemptions cover key sectors such as palm oil, rubber products, cocoa, aircraft components and pharmaceutical-related items, collectively valued at about US$5.2 billion (RM21.9 billion) or roughly 12% of Malaysia’s exports to the US.
Soh said this outcome safeguards critical export sectors and provides continued market access while the government and industry strengthen domestic competitiveness. “Without this agreement, Malaysia would have been exposed to a wave of new US tariff measures announced in recent months.”
The US has proposed 100% tariffs on semiconductor imports from firms that do not move production to America, 50% tariffs on kitchen cabinets and bathroom products and 30% tariffs on upholstered furniture.
Soh noted that there have also been signals of future action on branded or patented pharmaceuticals not supported by production in the US.
He said these measures reflect a broader strategy to push manufacturing back to the US and impose higher costs on producers operating abroad.
“The reciprocal trade agreement protects Malaysian exporters from being caught in these sweeping actions and ensure continued access to the US market under stable and predictable conditions.
“The agreement takes effect once it enters into force, but its implementation will be gradual. Malaysia’s tariff reductions and related commitments will be introduced in stages to ensure adjustments occur smoothly over several years,“ said Soh.
He noted that this phased approach applies across product categories and includes changes to excise duties, sales and service tax, and technical and pharmaceutical standards.
The timeline allows Malaysian industries and regulators to build capacity, upgrade systems, and adapt to new rules while giving businesses room to invest, raise efficiency and align with international standards. This structured transition reflects Malaysia’s careful negotiation strategy to safeguard domestic industries while positioning them for deeper integration into global supply chains.
The framework also provides clarity and stability for investors, encouraging collaboration between Malaysian and US firms in high-value manufacturing and digital sectors.
“The bottom line is that the agreement gives Malaysia’s manufacturing sector breathing space, continuity of market access and a stronger foundation for investment.
“The challenge now is to turn these terms into concrete results. Industry and government must work together to accelerate capacity building, move up the value chain and fully leverage the exemption and implementation package to enhance Malaysia’s competitive position,“ said Soh.
