In the 2025 National Trade Estimate Report, the US trade representative said the tariffs and restrictions make Malaysia one of dozens of countries that practise “unfair” trade rules and policies.
The report was released on Monday, just two days before Trump is expected to announce new “reciprocal tariffs” to match high taxes and tough non-tariff barriers imposed by other countries on American goods.
According to the report, Malaysia imposes a 251% maximum tariff on dairy products from the US, which is regarded as a major hurdle for American exporters.
Malaysia also maintains high duties and a restrictive permit system that makes it difficult for US products to compete fairly, even as Malaysia continues to enjoy a significant trade surplus with the US.
One major concern raised is the National Automotive Policy, which restricts foreign car imports to just 10% of the domestic market.
The system relies on national approved permits (APs), which the US claims are administered in a non-transparent manner and benefit local carmakers like Proton and Perodua.
The report said imported electric vehicles currently enjoy import and excise duty exemptions, but noted that these incentives are set to end by Dec 31, 2025, raising questions over the long-term openness of Malaysia’s EV market.
The report notes that Malaysia has bounded 83.8% of its tariff lines under the World Trade Organization, with an average bound rate of 21.1%.
This gives the country flexibility to raise tariffs within WTO limits, creating uncertainty and raising costs for US exporters, the report read.
Reuters reported that Trump’s reciprocal tariffs are aimed at matching the higher rates imposed on “specific goods and compensate for non-tariff barriers that put US exports at a disadvantage”.
Last week, Trump announced that a 25% tariff will be imposed on US auto imports. This is meant to bolster US vehicle production. - FMT
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