From Samirul Ariff Othman

Malaysia signed the Agreement on Reciprocal Trade (ART 2025) with the US on Oct 26 amid much fanfare and flag-waving, becoming the first Asean state to conclude a “reciprocal” pact under Washington’s revived trade agenda.

The optics were impressive: Malaysia standing shoulder-to-shoulder with the world’s largest economy. But the deeper question remains: what exactly was gained, and what was merely promised?

Between reciprocity and reality

The deal is part of US president Donald Trump’s “fair and reciprocal trade” framework established in April. It authorises the president to negotiate tariff adjustments under the International Emergency Economic Powers Act and the Trade Expansion Act of 1962, without congressional ratification.

In legal terms, this means ART 2025 is not a treaty. It is an executive agreement; a political instrument that binds governments diplomatically, not juridically. It can be suspended, revised, or revoked by a sitting or future US president at will.

Yet, despite this fragility, the agreement carries real-world consequences.

Malaysia committed to expand market access for US goods, align selected standards, and facilitate investment cooperation in energy, critical minerals, and telecommunications.

In return, the US agreed to maintain a 19% tariff ceiling on Malaysian exports — down from a potential 25% — and grant tariff exemptions on 1,711 Malaysian products.

That last point matters. It means Malaysia did secure tangible trade concessions, even if limited. The deal is not an empty handshake. It is a qualified one.

A delicate balancing act

Malaysia’s rationale was pragmatic. The Trump administration’s tariff threats had already unsettled exporters and weakened confidence in Asean’s collective bargaining power. Securing an agreement stabilised market access and helped avoid an estimated RM15 billion in potential export losses for Malaysian electronics, rubber, and palm-based goods.

Domestically, the government has framed ART 2025 as a “strategic stabiliser” rather than a giveaway — emphasising the zero-tariff exemptions and digital-cooperation clauses.

Yet, local criticism has been fierce. Commentators warn that the agreement’s language — replete with “Malaysia shall” and “US may” clauses — reveals an imbalance of obligation. Some opposition leaders have even branded it a “surrender disguised as diplomacy”.

In truth, both views capture part of the picture. Yes, Malaysia did obtain concessions and stability, but the core asymmetry remains structural. Washington retains flexibility and Putrajaya assumes commitments.

Law without teeth

Critics are correct to question the durability of these pacts. In Washington, such agreements have the legal weight of a press statement with a policy header. They cannot override US statutes because only Congress can set or remove tariffs.

Moreover, US courts have already challenged the legality of Trump’s “reciprocal tariff” actions. In Transpacific Steel v. United States (2020) and later decisions in 2025, the US Court of International Trade ruled that certain presidential tariff orders exceeded statutory authority under Section 232.

In plain language: parts of the reciprocal tariff regime have already been struck down.

So while Malaysia treats ART 2025 as an enforceable accord, US judges may one day deem it administratively void. This reinforces the central paradox — Malaysia’s obligations are binding under international optics, but America’s are conditional under domestic law.

Regional context — Asean, supply chains and sovereignty

The timing of ART 2025 is not incidental. As Asean chair, Malaysia faces the task of navigating the bloc through tariff fragmentation and digital trade realignment.

The deal helps project Malaysia as a reliable partner for both the US and China, yet also risks being read as tacit alignment with Washington’s supply-chain strategy.

The critical minerals clause — touted as “cooperation on rare-earth processing” — fits into America’s attempt to diversify away from China. While this could bring investment into Malaysia’s nascent rare-earth downstream industry, it also subjects Putrajaya to US export-control coordination, including potential alignment with sanctions.

That means Malaysia could face diplomatic tension if forced to mirror US restrictions on Chinese technology or Russian energy. It’s a fine line between cooperation and constraint.

The economic subtext, optics over obligation

Malaysia’s negotiators did secure small but concrete benefits, from the zero-tariff rate for 1,711 Malaysian export items, to assurances of American financing for Malaysian renewable energy and semiconductor projects, and an opening for joint digital trade governance discussions aligned with the Digital Madani agenda.

Still, the reciprocity gap is visible. Malaysia’s commitments are time-bound, front-loaded, and explicit; the US obligations are deferred, conditional, and discretionary.

To its credit, Putrajaya has been careful to frame this not as a full free-trade deal but as a tariff truce and investment framework — a holding pattern until global conditions stabilise.

Trump’s diplomatic model thrives on symbolism over substance. These deals deliver headlines, not institutional integration. They enable the US to claim leverage without legislative cost, and partner countries to claim access without structural change.

Everyone signs because it is cheaper to sign than to be sanctioned. For middle-income economies like Malaysia, these are survival instruments — a way to buy time in an unpredictable world.

What Malaysia must do next

Malaysia should now convert this breathing space into long-term advantage:

1. Leverage the tariff window to push Malaysian SMEs deeper into the US supply chain before reviews reset the terms.

2. Codify domestic safeguards; ensure standards alignment clauses do not erode regulatory sovereignty.

3. Anchor the deal within Asean by advocating for an Asean–US reciprocal review mechanism to prevent bilateral fragmentation.

4. Monitor implementation quarterly through the investment, trade and industry ministry, and Wisma Putra to ensure US financing pledges materialise.

The Malaysia-US deal is neither a triumph nor a trap, but a temporary equilibrium. It reveals how modern trade politics operate: through performative agreements that are legally soft but strategically sharp.

Malaysia should treat ART 2025 as a strategic pause, not a permanent pact; a window to attract investment, modernise sectors, and reinforce Asean’s economic resilience.

Because when history looks back, it may not remember who signed first, but who used the interlude wisely.

Samirul Ariff Othman is an economist, international relations analyst, adjunct lecturer at Universiti Teknologi Petronas, and a senior consultant with Global Asia Consulting. He is also an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of FMT.