Explainer | What US tariffs mean for Malaysian businesses and workers

While the final rate may look like a good deal on the surface, the deal also raises questions as to whether Malaysia gave up too much

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Shipping containers stacked at Westport in Klang, Malaysia. Last year, Malaysia sent a record US$47 billion in shipments to the US. Photo: AP

Published: 11:14am, 7 Aug 2025Updated: 1:40pm, 7 Aug 2025

When the US tariffs finally landed on July 31, the 19 per cent rate came as some relief in Malaysia. But in the days since, Malaysia’s government, businesses and confused public are still unpacking the fine print in a deal that gives US companies wide open access to their home market – while restricting its own giant economy to Malaysian exports.

The tariff rate puts Malaysia on equal footing with Indonesia, Thailand and the Philippines, and slightly better off than Vietnam’s 20 per cent.

At face value, that means Malaysia retains a comparative advantage over its Southeast Asian peers with its higher base of performance in mature industries, including the semiconductor sector.

But it is still a slap in the face for a country which sent a record 198.7 billion ringgit (US$47 billion) in shipments to the US last year. Export businesses are bracing for plummeting demand from US clients as prices are likely to soar when the tariffs take effect from August 7.

The deal also raises questions as to whether Malaysia gave up too much, especially with its pledge to spend US$240 billion on US products and investments over the next decade.

While it is still early days – finer details of the deal will be known after Malaysia and the US officially sign a trade agreement later this year – many are already preparing for the worst. Here’s what we know … and some of what we do not.

1. Who will hurt the most?

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.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}While the final rate may look like a good deal on the surface, the deal also raises questions as to whether Malaysia gave up too much

1. Who will hurt the most?

While the final rate may look like a good deal on the surface, the deal also raises questions as to whether Malaysia gave up too much