Malaysia’s lower rate hinges on promised forced-labour reforms, even as an overcapacity investigation threatens higher levies
4-MIN READ4-MIN ListenIman Muttaqin YusofPublished: 4:28pm, 27 Jul 2026Malaysia has won a small victory in Washington’s tariff wars, securing a 10 per cent rate that leaves it better placed than four of its Southeast Asian neighbours in the scramble for US orders.Economists warn the narrow advantage may prove fleeting, however, as it hinges on Kuala Lumpur fulfilling its promised trade reforms.
The new duties, which fall under Section 301 of the US Trade Act and took effect on Friday, keep Malaysia in the lower tier of a new American tariff regime alongside Indonesia and Cambodia – while Thailand, Vietnam, Singapore and the Philippines were pushed to 12.5 per cent.
For Malaysian exporters, the latest levy caps a dizzying 16 months. US President Donald Trump first announced a 24 per cent “reciprocal” tariff on the country in April last year, before lowering it to 19 per cent in August after talks tied to an Agreement on Reciprocal Trade, signed in October.
A US Supreme Court ruling in February then rendered this and Trump’s other “reciprocal” tariffs essentially void, to be replaced by a temporary 10 per cent global levy that was in place until Friday’s Section 301 tariffs were imposed, allegedly due to forced labour concerns.
