November 1, 2025
To: CEOs / Managing Directors / Export Managers / Marketing Managers
Malaysia-United States Agreement on Reciprocal Trade (ART)
The Agreement on Reciprocal Trade (ART 2025) between Malaysia and the United States, signed on October 26, 2025, is formally documented in an annex that provides the comprehensive tariff schedules of both nations - https://www.whitehouse.gov/wp-content/uploads/2025/10/MALAYSIA-ANNEX_APPENDIX.pdf
This section outlines the new duty structure and the gradual staging commitments (timelines for reduction/elimination) for goods originating from the U.S. and imported into Malaysia. The following are the key staging categories used to phase the tariff reductions and eliminations:
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Staging Category
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Implication for US-Originating Goods
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Implementation Timeline
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EIF (Entry Into Force)
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Customs duties eliminated entirely (duty-free)
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Immediate upon entry into force of the Agreement.
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E5 (5 Years)
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Duties eliminated in five equal annual stages
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Goods become duty-free effective January 1 of Year 5.
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E9 (9 Years)
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Duties eliminated in nine equal annual stages
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Goods become duty-free effective January 1 of Year 9.
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R5
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Duties reduced immediately to 5% ad valorem
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Immediate upon entry into force.
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R10/R15
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Duties reduced immediately to 10% or 15% ad valorem, respectively
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Immediate upon entry into force.
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A, B, C, D
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Duties are bound to remain at their current MFN rates of 0%, 2%, 3%, or 5% ad valorem, respectively.
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Upon entry into force.
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Z
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Duties remain subject to the applied MFN import duty rate of Malaysia (no change)
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Perpetual.
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Appendix 1 (page 4) details the establishment of new Tariff-Rate Quotas (TRQs) for specific agricultural and food products, allowing a defined quantity of U.S.-originating goods to enter Malaysia duty-free. Goods exceeding the quota volume will be subject to the higher MFN duty rate (Category Z).
2. Tariff Schedule of the United States (Pages 390–454)
This section details the reciprocal tariff rates and the preferential commitments extended by the U.S.to Malaysian exports, including the zero-tariff exemptions and reduced duty rates. Among the key implication for Malaysian exporters include:
- Tariff Rate Reduction
The U.S. agreed to maintain the reciprocal tariff rate at a fixed 19% for most Malaysian goods. This is a critical benefit, as the rate had been previously raised to as high as 24% or 25%. The deal locks in a lower, predictable rate, allowing businesses to plan production and pricing more effectively.
- Zero-Tariff Exclusions
U.S. committed to a 0%reciprocal tariff on approximately 1,711 tariff lines, which account for an estimated US$5.2 billion of Malaysian exports.
The zero-tariff exemptions are concentrated in Malaysian's most important export industries, safeguarding their competitiveness namely in:
- Semiconductors & Electronics
- Critical Minerals & Rare Earths
- Commodities - Includes products like palm oil, rubber-based goods, and cocoa
- High-Value Manufacturing - Includes aerospace parts and pharmaceuticals
It is also crucial to highlight the scope limitations within the exempted tariff lines such as but not limited to:
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HTSUS Range
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Description Examples
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Scope Limitation
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2806, 2807, 2809 (Acids)
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Hydrogen chloride (Hydrochloric acid); Sulfuric acid; oleum; Phosphoric acid and polyphosphoric acids
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Pharma
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2901 - 2924 (Organic Chemicals)
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Saturated acyclic hydrocarbons; Dichloromethane (Methylene chloride); Diethyl ether; Guaifenesin; Alachlor (ISO)
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Pharma
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3802 (Activated Carbon)
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Activated carbon
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Pharma
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40 (Rubber)
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Rods and profile shapes of vulcanized, noncellular rubber; Tubes, pipes and hoses of vulcanized rubber; New pneumatic tires... of a kind used on aircraft
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Aircraft
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73 (Iron/Steel)
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Seamless, cold drawn or cold-rolled, tubes, pipes and hollow profiles; Stainless steel, stranded wire, ropes, cables and cordage
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Aircraft
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84 (Machinery)
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Aircraft gas turbines; Hydraulic power engines and motors, linear acting (cylinders); Heat exchange units; Filtering or purifying machinery and apparatus for gases
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Aircraft
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85 (Electrical)
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AC generators (alternators); Electric generating sets; Radar apparatus; Flight data recorders
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Aircraft
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Members are strongly advised to immediately review their export product lines against the 1,711 exempted tariff codes to capture the immediate zero-tariff advantage. For further information, please contact FMM Secretariat, Ms Jess Chong at tel: 03-62867200 or e-mail: [email protected].