US reduces tariff on Malaysian exports from 25% to 19% effective 1 August 2025

With the new 19% tariff now a baseline, MITI said it is doubling down on its industrial reform and economic transformation agenda, aimed boosting long-term competitiveness, particularly among SMEs.

The US will be lowering its reciprocal tariff on Malaysian exports from 25% to 19%, effective 1 August 2025 – a move that aligns Malaysia with tariff rates applied to other Southeast Asian nations.

In a statement on Friday, (1 August 2025), the Ministry of Investment, Trade and Industry (MITI) said the move comes on the heels of nearly three months of bilateral negotiations between both governments, which concluded on 31 July 2025. Crucially, it added, the finalised rate was achieved without Malaysia compromising its right to pursue national policy priorities around economic stability, workforce transformation, and inclusive growth.

Minister of Investment, Trade and Industry, YB Tengku Datuk Seri Utama Zafrul Abdul Aziz, commented: "This decision by the United States reflects the strong and enduring economic ties between our two nations. It is also a testament to Malaysia's credibility as a reliable trade and investment partner."

He credited the outcome to sustained engagement with US counterparts, especially the US Trade Representative's Office and the Department of Commerce, supported by Malaysia’s trade agencies, think tanks, and business community.

With the new 19% tariff now a baseline, MITI said it is doubling down on its industrial reform and economic transformation agenda, aimed not just at shielding exporters from global headwinds, but also at boosting long-term competitiveness, particularly among small and medium enterprises (SMEs).

Key efforts include:

• Helping companies fully leverage Malaysia’s 18 Free Trade Agreements (FTAs) to diversify export markets;
• Continuing industrial reform programmes as outlined in the New Industrial Master Plan 2030, Green Investment Strategy, and National Semiconductor Strategy – all of which place strong emphasis on automation, digitalisation, and productivity;
• Partnering with Bank Negara Malaysia and other key ministries to assess the GDP impact of the new tariff and design mitigation strategies, and
• Rolling out support measures to help SMEs adjust to the new trade landscape.

The move also comes at a time when global trade remains volatile, amid ongoing geopolitical tensions and shifting tariff regimes. However, MITI said it remains confident in Malaysia’s ability to weather these uncertainties, citing strong domestic demand, steady private consumption, and a high realisation rate (above 85%) of approved investments.

"We remain committed to defending Malaysia's trade interests while fostering mutually beneficial partnerships with key economies, including the United States. Malaysia will also continue to pursue its industrial reform and strategic trade diversification initiatives to support the nation's growth," Tengku Zafrul added.

“MITI will continue to work closely with stakeholders to maximise the opportunities from this development,” Minister Zafrul added, pointing to the momentum from catalytic infrastructure projects and Malaysia’s proactive diversification strategy.

In the months ahead, MITI will roll out targeted outreach programmes to guide businesses – including exporters and SMEs – on navigating the revised tariff structure. The Ministry also reaffirmed its commitment to working alongside the Prime Minister’s Office, trade chambers such as AMCHAM and USABC, and other stakeholders to safeguard Malaysia’s trade interests.

Photo / MITI Minister Tengku Zafrul's Facebook