Malaysia Cautiously Reviewing US Trade Deal

Cost-benefit analysis underway to assess potential impact of proposed agreement

Feb. 24, 2026 at 2:23am

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Malaysia's Ministry of Investment, Trade and Industry (MITI) is currently conducting a comprehensive cost-benefit analysis of the proposed United States-Malaysia Agreement on Reciprocal Trade (ART). The move signals a cautious approach by the Malaysian government as it weighs the potential implications of the trade agreement signed last year. The findings of the analysis will inform Putrajaya's final decision on whether to ratify the deal.

Why it matters

The ART represents a potential shift in US trade policy towards Southeast Asia, but its implementation could have significant economic implications for Malaysia. The ongoing analysis aims to ensure that any trade agreement aligns with Malaysia's long-term interests and does not adversely affect existing policy directions or the country's economic security.

The details

The cost-benefit analysis is examining the potential impact of implementing the ART, including implications for investors, supply chains, cost inflation, and employment. This comes as Malaysia also awaits a detailed briefing from MITI on the broader US tariffs, which have introduced an additional layer of uncertainty. The government is coordinating with officials in Washington and ASEAN counterparts to determine the most appropriate response to the evolving trade landscape.

  • The ART was initially signed during the 47th ASEAN Summit and Related Summits in Kuala Lumpur in October 2025.
  • The cost-benefit analysis was launched in February 2026, with findings expected to inform Putrajaya's decision on ratification.
  • The Malaysian government is awaiting a detailed briefing from MITI on the new US tariffs, which will be discussed at the upcoming Cabinet meeting on February 25, 2026.

The players

Ministry of Investment, Trade and Industry (MITI)

The Malaysian government agency responsible for conducting the cost-benefit analysis of the proposed US-Malaysia trade agreement.

Datuk Seri Johari Abdul Ghani

The Minister of MITI, who reiterated that the agreement has not yet come into force and emphasized the importance of the ongoing analysis to understand its potential impact.

Datuk Seri Anwar Ibrahim

The Prime Minister of Malaysia, who indicated that the matter of the new US tariffs would be discussed further at the upcoming Cabinet meeting.

United States

Malaysia's third-largest trading partner, with total trade reaching approximately RM367 billion in 2025.

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What they’re saying

“At present, the Ministry is conducting a cost–benefit analysis of the agreement to examine the implications of its potential implementation.”

— Datuk Seri Johari Abdul Ghani, Minister of MITI (Parliamentary written reply)

“The government remains committed to safeguarding national interests and ensuring that any implementation of the agreement does not affect existing policy directions or Malaysia's economic security.”

— Datuk Seri Johari Abdul Ghani, Minister of MITI (Parliamentary written reply)

What’s next

The findings of the cost-benefit analysis will be presented to the Malaysian Cabinet, which will then make a decision on whether to ratify the US-Malaysia Agreement on Reciprocal Trade.

The takeaway

Malaysia's cautious approach to the proposed trade agreement with the US reflects the government's commitment to thoroughly assess the potential implications and ensure that any trade deal aligns with the country's long-term economic interests. The ongoing analysis aims to navigate the evolving trade landscape and protect Malaysia's economic security.