Malaysia’s exports to the United States will face a 19% import tariff starting 7 August 2025, under a revised executive order signed by US President Donald Trump. This is a reduction from the previously proposed 25%, and forms part of a wider recalibration of trade policies affecting several ASEAN economies.

The move comes amid US efforts to narrow trade imbalances and implement uniform tariff rates for key trading partners. The new tariff structure applies to all Malaysian goods entering the US for domestic use, with limited exemptions for shipments already in transit before 1 August.

What This Means for Malaysian Prices and Businesses

Although this is not a complete trade restriction, the 19% tariff will increase export costs for Malaysian businesses, particularly those in key sectors such as electronics, semiconductors, and palm oil-based products. Companies trading with the US may see tighter profit margins, and American buyers could face higher prices.

If you’re a business involved in US exports, you’ll need to reassess your pricing strategies, shipping timelines, and supply chain compliance. The seven-day grace period applies only to goods already shipped before 12.01am on 1 August.

A Regional Shift: How ASEAN Nations Are Affected

Malaysia is not alone. Other ASEAN countries are facing similar rates: Indonesia, Thailand, the Philippines, and Cambodia will also be subject to a 19% tariff. Vietnam faces a slightly higher 20% rate, while Laos is hit hardest at 40%.

These tariffs are part of amendments to Executive Order 14257, which the US signed to revise its trade relationships based on each country’s perceived trade surplus with the United States.

Outside ASEAN, Taiwan now faces a 20% duty, while India faces a 25% tariff. Brazil has been assigned a significantly higher rate at 50%, the UK remains at 10%, and US allies like Japan and South Korea face a flat 15%.

US Justifies Tariffs as National Security Measure

According to the White House, the revised tariffs are necessary to address long-standing trade deficits, which it considers a risk to US economic security. The move is supported under the US Trade Act of 1974 and emergency economic powers granted to the presidency.

President Trump noted that the new executive order allows flexibility for future changes. The US Trade Representative (USTR) will continue to monitor for compliance and potential retaliation from trade partners.

In particular, anti-transhipment rules have been tightened. Any attempt to route Malaysian goods through third countries to bypass tariffs will result in a 40% penalty, and violators could be publicly listed.

Could Tariffs Be Adjusted Again?

Yes — the current 19% rate is considered provisional. Countries in active trade talks with the US could see these rates revised, either up or down, depending on the outcome of ongoing negotiations.

For now, exporters must treat the 19% as the official rate from 8 August, unless their shipments qualify for the grace period or fall under a separate exemption.

Important Considerations for Malaysian Exporters and Investors

For Malaysian exporters and investors engaged with the US market, the new 19% tariff means increased costs that could affect pricing and competitiveness. It’s important to note that shipments already in transit before 1 August benefit from a seven-day grace period, offering some short-term relief. Businesses must prioritise compliance, as the US has introduced stricter penalties and heightened reputational risks for companies caught attempting to reroute goods to avoid tariffs. Looking ahead, tariff rates may be adjusted further based on ongoing trade negotiations or changes in US policy. 

This tariff revision forms part of a wider US strategy to strengthen trade rules while recalibrating economic ties. Staying informed and adaptable will be key for Malaysian businesses and investors aiming to successfully navigate these evolving global trade conditions.

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(Source: The Edge)

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