Kuala Lumpur, 1 August 2025: The Institute of Democracy and Economic Affairs (IDEAS) is concerned by the latest decision by the United States (US) government to impose a 19% tariff on Malaysian exports. Trump’s latest executive order solidifies his illiberal and punitive international trade agenda, imposing additional tariffs of between 10% and 41% on a range of countries, including Malaysia. 

While Malaysia’s tariff rate of 19% is lower than the 25% initially outlined in President Trump’s earlier announcement, the basis for this adjustment remains unclear. With implementation scheduled to take effect in just seven days, and no public disclosure of the concessions made during bilateral engagements, the announcement does little to alleviate the deepening uncertainty facing Malaysian exporters and international investors.

In addition to the headline tariffs, the announcement raises several concerns:

• The use of vague and undefined terms such as “transshipment” introduces legal and commercial uncertainty, particularly for firms operating within complex, integrated regional supply chains where goods may legitimately transit multiple countries, but now risk incurring a punitive 40% tariff
• The six-month review mechanism creates a state of continuous instability for traders and investors, risking long-term investment decisions
• Complex tariff treatment for goods in transit or storage, which adds to market disruption and casts doubts on the predictability of US trade enforcement

“While the 19% is lower than the 25% initially threatened in Trump’s June letter, we still have no clarity on what concessions Malaysian negotiators provided to secure this outcome. The lack of transparency surrounding these unequal and needless negotiations is worrying. There are no winners from these tariffs. They create uncertainty, erode trust, and move global trade away from facilitative rules and governance, hurting Malaysian businesses and consumers alike,” said Dr Stewart Nixon, Deputy Research Director of IDEAS.

The absence of clear definitions, credible enforcement mechanisms, and any assessment of cross-sector impacts makes outcomes highly uncertain. Trade remains disrupted, and the investment environment in a state of crippling stasis. It is important that this announcement brings an end to the Washington distraction and that ASEAN leaders refocus on the urgent task of reinforcing ASEAN centrality, diversifying and deepening ties with countries that support free and fair trade.

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Download the Media Statement PDF File Here

For enquiries, please contact:
Ryan Panicker
Assistant Manager, Advocacy and Events
T: 03 – 2070 8881/8882 | E: ryannesh@ideas.org.my