Malaysia is working to lower upcoming U.S. tariffs from 25% to about 20%. These new tariffs, pushed by U.S. President Donald Trump, are expected to begin on August 1. According to sources familiar with the talks, Malaysia wants the same tariff benefits that Indonesia and Vietnam currently enjoy.
The Malaysian government, led by Prime Minister Anwar Ibrahim, has already taken steps to deal with U.S. concerns about illegal semiconductor shipments. This has helped move negotiations forward.
However, Malaysia is not ready to agree to all U.S. demands. One major issue is tax breaks for electric vehicles (EVs). The U.S. wants Malaysia to extend its EV tax benefits to American-made cars. But Malaysia is worried that doing so would force them to offer the same deals to other countries, which could become complicated and expensive.
Malaysia’s EV tax exemption program will end in December this year. Officials also point out that the U.S. has very little presence in Malaysia’s EV market, so they question why it is pushing so hard for access.
Other U.S. requests—like loosening rules on foreign ownership in Malaysia’s power and financial sectors—have also faced resistance. Malaysia is also refusing to reduce subsidies for its fishermen, as they are an important part of the local voting population.
So far, the U.S. government has not publicly commented on these negotiations.
