Kuala Lumpur – Malaysia’s Ministry of Investment, Trade and Industry (MITI) is currently undertaking a comprehensive cost-benefit analysis of the Agreement on Reciprocal Trade (ART) with the United States, according to a parliamentary reply from Minister Datuk Seri Johari Abdul Ghani. The analysis will inform Putrajaya’s decision on whether to ratify the agreement, which was initially signed during President Donald Trump’s visit to the 47th ASEAN Summit in Kuala Lumpur last October.
The move comes amid ongoing scrutiny of US trade policy following a recent Supreme Court ruling that struck down Trump-era tariffs imposed under emergency trade powers. While the legal basis for those broad tariffs has been challenged, the US retains other mechanisms to introduce trade measures, including unilateral tariffs, as noted by Minister Johari. The government is prioritizing a careful assessment of the potential implications for Malaysia’s economic security and existing policy directions.
In a written response to a question from Datuk Awang Hasim (PN-Pendang), Minister Johari stated that the Ministry is “conducting a cost–benefit analysis of the agreement to examine the implications of its potential implementation.” He further emphasized that the government “remains committed to safeguarding national interests” and will consider the findings of this analysis before making a final decision on ratification. The agreement has not yet come into force.
Agreement Signed Amid Shifting US Trade Landscape
The ART was signed in October 2025, but its future has grow less certain given the evolving trade policies of the US. Recent developments, including the imposition of a temporary 10% tariff by the Trump administration – later raised to 15% – have prompted Malaysia to seek further clarity from Washington. According to Malay Mail, Prime Minister Datuk Seri Anwar Ibrahim has indicated that Putrajaya is awaiting a detailed briefing from MITI before formulating a response to these new tariffs.
MITI is actively coordinating with officials in Washington, D.C., and with Malaysia’s counterparts within ASEAN to determine the most appropriate course of action. The United States remains a significant trading partner for Malaysia, with bilateral trade reaching approximately RM367 billion in 2025, according to the Malay Mail report.
Cautious Approach Reflects Regional Concerns
Malaysia’s cautious stance mirrors a broader regional approach to the changing US trade landscape. The Vibes reports that the government is monitoring Washington’s next moves closely, emphasizing its commitment to open and rules-based trade. Minister Johari has stressed the importance of understanding how the recent court decision and potential new tariffs will be implemented.
While the Supreme Court ruling removed one legal avenue for imposing tariffs, the US government still possesses alternative mechanisms. As The Vibes highlights, MITI is awaiting further clarification on the implementation of the temporary 10% tariff announced by President Trump and whether additional adjustments will follow. The government had previously signed the Agreement on Reciprocal Trade but has not yet ratified it, allowing time for this thorough assessment.
MITI is also seeking clarity on the broader implications of the US trade policy shift, particularly in the context of the Agreement on Reciprocal Trade (ART), as reported by Yahoo! News Malaysia. This ongoing analysis underscores the importance of a well-informed decision-making process to protect Malaysia’s economic interests.
The outcome of the cost-benefit analysis and the subsequent decision on ratification will be closely watched by businesses and policymakers alike, as it will shape the future of trade relations between Malaysia and the United States. The government’s commitment to safeguarding national interests and ensuring policy alignment suggests a deliberate and strategic approach to navigating the evolving global trade environment.
As MITI completes its assessment, stakeholders will be looking for clear signals regarding the potential benefits and risks associated with the ART, and how Malaysia intends to address the challenges posed by the changing US trade landscape. Further updates are expected following the Cabinet meeting scheduled for Friday, where the matter will be discussed in detail.
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