KUALA LUMPUR (Nov 3): Malaysia had no choice but to enter negotiations with the US over the recent reciprocal trade agreement, as the discussions were driven by Washington’s unilateral move, and the two sides were not on equal footing, Deputy Investment, Trade and Industry Minister Liew Chin Tong said.
Much like other export-reliant economies, including Japan, South Korea and China, Liew said Malaysia was “forced” into the talks after the US announced the so-called reciprocal tariffs back in April.
“If you ask me, of course I don’t want to negotiate. None of us want to negotiate with the US — not China, not Japan, not South Korea. But when the US said ‘you either follow my rules or I will impose hefty tariffs’, every nation had to decide to negotiate with the US,” he said during his speech at the Malaysian Institute of Economic Research (MIER) Business Conference on the 2026 National Budget, SST and International Trade Updates.
Liew said Malaysia had no desire to enter such talks but had to do so to protect its export markets. “This was not an equal partnership. It was a US unilateral action,” he said, noting that the same predicament applied to even countries in Europe and East Asia.
An imperative to reduce reliance on the US
Liew said Malaysia must draw lessons from this episode to reduce its dependence on the US market over the next two decades.
“In 20 years, we do not want to come back to the same point. Our dependency on the US market has to end,” he said, stressing that Malaysia’s future lies in diversifying trade partners and building stronger domestic demand.
He noted that Prime Minister Datuk Seri Anwar Ibrahim’s previous and planned visits to Central Asia, Africa and Latin America are part of a broader effort to expand Malaysia’s reach into new and emerging markets.
Malaysia aspires to move beyond being a “trading nation” to becoming a “technology nation” that develops its own industrial capabilities, rather than relying solely on foreign investments.
“We want to be seen as a technology producer and innovator. It’s not easy, but we can do it,” Liew said, pointing to Malaysia’s growing ecosystem of semiconductor and high-value manufacturing firms in Penang and the Klang Valley.
While diversification would take time, the government is laying the groundwork to ensure Malaysia can thrive in a “multipolar” world where trade and capital flows are no longer dominated by a single superpower, he said.
Kuala Lumpur and Washington formalised the reciprocal trade agreement when US President Donald Trump visited the country as part of the Asean summit to deepen bilateral economic ties and strengthen supply chain resilience, including cooperation in critical minerals development.
Under the deal, Malaysia committed to refrain from banning or imposing quotas on exports of critical minerals or rare earth elements to the US, while ensuring no restrictions on the sale of rare earth magnets to US companies. The pact includes commitments to expedite development of the sector in partnership with American firms, with extended operating licences to provide regulatory certainty.
Other key provisions from the agreement include Malaysia granting significant preferential market access for US industrial and agricultural exports, while the US will maintain a 19% reciprocal tariff on Malaysian-origin goods as first set on April 2, 2025.
But the agreement has sparked criticism from various quarters, with detractors accusing the government of compromising national sovereignty. Liew dismissed those claims, stressing that Malaysia retained the right to make its own decisions under the pact.
He explained that the relevant clause clearly states that any request by the US for Malaysia to take restrictive measures against a third country must be based on “shared economic or national security concern”, agreed upon by both sides and exercised in good faith.
“Have we given up our sovereignty? My answer is no. But are we happy that we entered into this negotiation? We are not happy, but we are forced to do it,” he said.
