Malaysia Reportedly Seeks 20% Tariff Cap From Trump — Still Haggling Over EVs, Foreign Ownership Demands

Malaysia’s government is reportedly negotiating with the U.S. to lower tariffs to about 20%, but is unwilling to make concessions regarding electric vehicles and foreign ownership rules.

According to a Bloomberg News report, Prime Minister Anwar Ibrahim’s government is seeking to strike an agreement with Washington, D.C., before the 25% tariffs take effect on Aug. 1, by cutting tariffs to levels similar to those of its regional partners, Indonesia and Vietnam.

While the Malaysian government has made progress in addressing key U.S. concerns regarding semiconductors, the negotiators of the Southeast Asian country have so far resisted U.S. demands for an extension of tax breaks on American EVs, a reduction of foreign shareholding limits in the crucial power and financial sectors, and a cut in subsidies for local fishermen, the report said citing people familiar with the matter.

According to the Office of the U.S. Trade Representative, Washington’s goods trade with Malaysia totaled an estimated $80.2 billion in 2024, and the U.S. had a trade deficit of $24.8 billion with the ASEAN member.

Retail sentiment on Stocktwits about iShares MSCI Malaysia ETF (EWM) was in the ‘neutral’ territory at the time of writing. The ETF is down 1.7% this year, compared to the SPDR S&P 500 ETF (SPY) 's 6.7% gain.

On Monday, the Malaysian PM reportedly said that his government draws a “red line” in trade talks concerning key national policies, including its preferential treatment to Malays and indigenous people. Last week, the country’s Minister for Investment, Trade, and Industry, Zafrul Aziz, had said that poorly designed trade deals could harm Malaysia’s economy in the long run.

Relatively smaller trading partners of the U.S., such as Malaysia, are walking a tightrope to balance between Washington’s demands and protecting their interests in volatile trade negotiations. Earlier this month, Vietnam was reportedly caught off guard after the Trump administration unilaterally declared that the country had agreed to 20% import tariffs.

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