Kuala Lumpur, 9 July 2025: The Institute for Democracy and Economic Affairs (IDEAS) is concerned about the United States’ decision to proceed with a 25% tariff on Malaysian goods exports from 1 August 2025. This move raises serious questions about the future of bilateral trade and investment relations, strikes a blow to international trade governance, and risks undermining regional solidarity. 

The minimal change between the ‘Liberation Day’ tariffs (24%) and the ‘final’ tariff rate reflects a lack of substantive progress in the secretive bilateral negotiations. IDEAS remains sceptical that constructive outcomes can be reached from talks that lack openness, sideline stakeholder engagement, and appear driven more by political considerations than economic rationale. Malaysia must continue to avoid being drawn into retaliatory trade barriers or a false choice between major powers, and continue to diversify and deepen partnerships with countries that share its interest in open and mutually beneficial trade. 

“As ASEAN chair, it is imperative that Malaysia lead accelerated efforts towards a substantive and united regional response to US tariffs. The underwhelming outcomes from bilateral negotiations for Malaysia and other countries reinforce the need for collective action to combat Washington’s divide-and-conquer strategy. We cannot allow fragmented engagement to weaken ASEAN’s position on the global stage”, says Dr Stewart Nixon, Deputy Director of Research, IDEAS.

The Regional Comprehensive Economic Partnership (RCEP) provides a ready-made platform for deepening regional connectivity as a counter to US isolationism, and ASEAN leadership to deepen the associated architecture needs to be progressed with urgency. The recently established ASEAN Geoeconomics Task Force must shift from trade-centric monitoring and assessment into wider shock preparedness, advancing practical initiatives to support trade and investment diversification and resilient supply chains. 

Malaysia should also be increasingly vigilant to ensure its domestic policy agenda supports its image as a stable and attractive destination for trade and investment. Recent domestic measures such as introducing differentiated  Sales and Services Tax (SST) rates for certain domestic and imported goods, may be financially justifiable but risk being perceived as protectionist.  At a time when investors’ confidence is crucial, such signals could complicate Malaysia’s position in international trade discussions. IDEAS calls on the government to prioritise policy consistency, transparency in negotiations, and clear engagement with regional partners to protect Malaysia’s long-term economic interests.

— ENDS —

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