Malaysia has become the first country to declare its trade agreement with the United States invalid following a U.S. Supreme Court ruling in February that deemed President Donald Trump’s tariffs under the International Emergency Economic Powers Act illegal. Investment, Trade, and Industry Minister Datuk Seri Johari Abdul Ghani announced that the U.S.-Malaysia Agreement on Reciprocal Trade (ART), signed in October 2025 during the Asean Summit, is now considered ‘null and void.’
Johari criticized the justification of tariffs based on trade surpluses, urging U.S. authorities to specify affected industries rather than imposing blanket measures. The ART had covered roughly 12% of Malaysia’s exports to the U.S., with a reciprocal tariff of 19% on Malaysian imports, barring certain exemptions. Its nullification raises immediate concerns for key export sectors like electrical and electronics, oil and gas, palm oil, gloves, and other rubber products.
Adding pressure, the Trump administration launched a broad trade investigation last week under Section 301 of the Trade Act of 1974, targeting Malaysia among 16 trading partners for alleged unfair practices. Johari stressed the need for Malaysian exporters to adhere to labor and environmental standards to mitigate potential fallout from this probe.
Domestically, the move has sparked political friction. Malaysia’s opposition party, Perikatan Nasional, through secretary-general Takiyuddin Hassan, has demanded a special parliamentary session to address the economic ripple effects on export sectors and supply chains.
The scrapped agreement, originally designed to enhance market access for Malaysian exporters and lower costs for U.S. goods, now leaves bilateral trade flows in limbo. Trump’s recent threat of ‘much higher’ tariffs against nations challenging existing deals further clouds the outlook. As of the latest data, Malaysia’s affected exports under the ART framework were valued at a significant portion of its $287 billion annual trade relationship with the U.S.
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