Malaysia: US tariffs on Malaysian imports announced on 2 April 2025

04 Apr 2025    2 minute read
Trade Tariffs Trump Customs Imports Exports Supply Chain Malaysia United States US Election 24

In brief

On 2 April 2025, United States President Donald J. Trump has invoked his authority under the US International Emergency Economic Powers Act of 1977 (IEEPA) to impose the following tariffs on imports into the United States:

  1. A baseline 10% tariff on all imports (except Canada and Mexico), effective on 5 April 2025 at 12:01 a.m. EDT (5 April 2025 at 12:01 p.m, Malaysia time)
  2. An individualized reciprocal higher tariff for specific countries, in lieu of the baseline tariff. The reciprocal tariff to be imposed on Malaysian imports is at 24%. This is effective on 9 April 2025 at 12:01 a.m. EDT (9 April 2025 at 12:01 p.m, Malaysia time).

Certain goods are not subject to the reciprocal tariffs (e.g., steel, aluminum and autos and auto parts subject to existing Section 232 tariffs [of the US Trade Expansion Act of 1962], copper, semiconductors, pharmaceuticals, lumber, certain energy and critical minerals).

Contents

This comes after several rounds of product-specific tariff announcements impacting Malaysian goods, including but not limited to:

  • 25% tariff on all steel and aluminum under Section 232
  • 25% tariff on all automobiles and automobile parts under Section 232

For further details, please see our blog post here.

Malaysia's response

In a media statement released on 3 April 2025, the Malaysian Ministry of Investment, Trade and Industry (MITI) made clear that Malaysia is not considering retaliatory tariffs and will continue engaging with the US authorities to seek solutions to uphold the spirit of free and fair trade.

The recently established National Geoeconomic Command Centre (NGCC), chaired by Prime Minister Anwar Ibrahim, will evaluate the impact of the tariffs and will consider a comprehensive and multi-pronged strategy to mitigate the effects of these tariffs on economy and industries. At the ASEAN level, the first meeting of the ASEAN Geoeconomic Task Force, established at the ASEAN Economic Ministers' Retreat in February 2025, will also commence soon to discuss the impact of these tariffs.

What can companies do?

Companies affected by the reciprocal tariffs may consider the following steps to mitigate the impact of the same:

  • Assess the potential impact of the increased tariffs and ascertain the parties who will bear the increased cost under relevant contractual terms. Where necessary, assess whether the liability arising from the reciprocal tariffs may be shifted or mitigated through contractual terms such as force majeure and price adjustment clauses.
  • Revisit their supply chains to determine whether there are opportunities to optimize duty saving through partial or full relocation of manufacturing activities in line with the US substantial transformation test.
  • Revisit their customs valuation strategy to identify opportunities for further optimizing the declared customs value through, amongst others:
    • Adopting the "first sale for export" rule where multiple sale transactions are involved
    • Disaggregating goods for final assembly in the country of import
    • Reducing customs value by removing non-dutiable costs (i.e., to remove non-dutiable licensing fee, royalties, marketing fee, and other costs) from the cost of goods.
  • Consider whether the goods can qualify for or be modified to qualify for exemption from the reciprocal tariffs (see the limited scope of products subject to exemption).

Kindly contact us should you have any questions or require assistance on tariff mitigation options.

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Senior Associates, Ivy Tan and Jeff Sum, have contributed to this legal update.

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