Kuala lumpur: US President Donald Trump’s visit to Malaysia, coinciding with the ASEAN Summit, has resulted in the signing of the Agreement on Reciprocal Trade (ART) with the United States. This agreement is anticipated to enhance Malaysia’s gross domestic product (GDP) growth by 0.5 to 0.7 percentage points annually until 2030, as stated by an analyst.
According to BERNAMA News Agency, IPPFA Sdn Bhd director and country economist Mohd Sedek Jantan highlighted that the “deal-blitz” strategy has paved the way for expedited trade cooperation, tariff modifications, and new partnerships in critical minerals and supply chains. The trade agreement positions Malaysia strategically as a neutral hub for trade and investment amidst increasing global protectionism.
Mohd Sedek emphasized that maintaining the tariff structure and reducing tariffs for 1,711 Malaysian export products to the US will bolster the competitiveness of Malaysia’s exports, particularly in the manufacturing and electrical goods sectors. He projected that trade between Malaysia and the US could increase by 15-18 percent, potentially reaching US$110 billion by 2030. This growth is expected to be accompanied by a rise in foreign direct investment (FDI) between US$12 billion and US$15 billion in the coming years.
The tariff exemptions, covering more than 12 percent of Malaysia’s exports to the US, are likely to enhance export earnings and industrial competitiveness. This development is anticipated to create at least 10,000 new jobs, especially in Penang’s agro-tech and high-value manufacturing clusters. Additionally, the move is set to encourage research and innovation, increase the earnings of export-linked companies, and provide a platform for local SMEs to expand into Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) markets.
The ART, signed by Trump and Prime Minister Datuk Seri Anwar Ibrahim, facilitates the export of up to 1,711 Malaysian products, such as palm oil, rubber, cocoa, pharmaceutical components, and aerospace equipment, to the US at tariffs below 19 percent. Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz noted that these exempted items, valued at US$5.2 billion, account for approximately 12 percent of Malaysia’s total exports.
The US has also agreed to maintain a reciprocal tariff rate of 19 percent, as initially outlined in Executive Order 14257, dated April 2, 2025, for Malaysian-originating goods. Mohd Sedek projected a positive economic outlook for Malaysia in 2026, with growth rates expected between 4.3 percent and 4.5 percent, supported by stronger exports, increased tourism, and stable government spending. Despite potential risks from global uncertainties such as US-China tensions, there is also considerable upside potential, he added.