Malaysia: 90-day pause on US reciprocal tariffs

15 Apr 2025    3 minute read
Trade Customs Tariffs Valuation Supply Chain Restructuring

In brief

On 9 April 2025, the US administration announced a 90-day postponement of the individualized reciprocal tariffs for most countries while maintaining the baseline tariff of 10% on these countries without a specified end date. Therefore, the 24% reciprocal tariff on Malaysian imports into the US will be postponed during the 90-day period (9 April 2025 until 8 July 2025), and the baseline tariff of 10% will apply instead. 

This decision was made to allow for negotiations with over 75 countries that have expressed concerns about the tariffs. However, the US administration has announced additional tariffs on Chinese imports, bringing the total tariff rate on Chinese-originating goods to 145%.

Contents

For more details on the scope of these tariffs, please refer to our earlier client alert here. (Note: On 11 April 2025, President Trump issued an Executive Order that expanded the list of HTSUS codes exempted from the reciprocal tariffs. The exemptions apply retroactively to goods entered for consumption on or after 12:01 am EDT on 5 April 2025. The newly added exemptions cover specific categories of products, including smartphones, computers, chips, and other electronic goods. However, the scope of these exemptions may change subject to new tariffs on imported semiconductors, which are expected to be announced soon.)

Impacts on Malaysia 

Having previously committed to not imposing any retaliatory tariffs, the 90-day pause on reciprocal tariffs has been welcomed by the Malaysian government. Prime Minister Datuk Seri Anwar Ibrahim stated that this pause provides temporary relief for the Malaysian economy, burdened by concerns on increased costs for Malaysian exporters and potential disruptions to trade flows.

Based on a joint statement by the ASEAN Economic Ministers on 10 April 2025, the bloc reiterated its commitment to not impose any retaliatory measures in response to the US tariffs. Instead, the bloc affirmed its common intention to engage in constructive dialogue with the US to address trade-related concerns and explore mutually acceptable solutions. The bloc also stated that it will strengthen and expand its economic links with external partners and seek out opportunities for economic cooperation with new partners. 

While the 90-day pause on reciprocal tariffs offers short-term relief, it does not eliminate the uncertainties surrounding future trade policies. The 10% baseline tariff on imports from Malaysia and the tariff rate of 145% on Chinese goods remains in effect, and the outcome of the negotiations with over 75 countries will significantly impact the global trade landscape. Companies should utilise this critical window to accelerate, not delay, contingency planning. As detailed in our previous client alert here, companies should consider mitigation options to cushion the impact of the tariffs, including evaluating the scope of the tariff exemptions, assessing contractual obligations, restructuring supply chains to meet origin criteria, and reviewing their customs valuation strategy.

Baker McKenzie closely monitors the developments and issues regular alerts accordingly – please also check our Import and Trade Remedies Blog and Looking Ahead: Business Impacts of the Trump Administration for regular updates and insight.

(Note: On 11 April 2025, President Trump issued an Executive Order that expanded the list of HTSUS codes exempted from the reciprocal tariffs. The exemptions apply retroactively to goods entered for consumption on or after 12:01 am EDT on 5 April 2025. The newly added exemptions cover specific categories of products, including smartphones, computers, chips, and other electronic goods. However, the scope of these exemptions may change subject to new tariffs on imported semiconductors, which are expected to be announced soon.)

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Jeff Sum, Senior Associate, and Chloe Ng, Legal Assistant, have contributed to this legal update.

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