Last week, U.S. President Donald Trump indicated that Washington may soon impose a 100 percent tariff on semiconductors imported into the United States, although firms that already manufacture in the U.S. or have pledged to do so would be excluded from this measure. Trump emphasized that companies making such commitments would face no tariffs—even if production has not yet begun—and warned that empty promises would be retroactively penalized.
In response, Malaysia’s Trade Minister, Tengku Zafrul Aziz, informed Parliament that the country’s semiconductors—and pharmaceutical goods—remain exempt from the new U.S. tariffs, which went into effect on 8 August 2025 at a 19 percent rate for other Malaysian exports. While these exemptions currently shield Malaysia’s vital chip exports from penalties, the minister noted that Malaysia risks losing a major market if its products become less competitive due to the evolving U.S. trade landscape.
Tengku Zafrul also revealed that as part of broader bilateral negotiations, Malaysia has agreed to spend up to USD 150 billion over the next five years on technology, aerospace, and data-centre equipment from U.S. companies. In parallel, state energy firm PETRONAS will commit to purchasing USD 3.4 billion annually in liquefied natural gas from U.S. suppliers.
As these shifts unfold, the uncertainty surrounding U.S. tariff policy continues to cast a shadow over Malaysia’s export-driven economy, particularly given its deep reliance on semiconductor manufacturing and exports.
