Malaysia Faces 10 Percent US Tariff Proposal
KUALA LUMPUR โ Malaysia faces a 10 percent tariff proposal from the United States (US) following an investigation into forced labor issues, but the decision on it has not yet been finalized. Minister of Investment, Trade and Industry, Datuk Seri Johari Abdul Ghani, said this during a parliamentary question-and-answer session on Tuesday.
According to him, Malaysia is among 60 countries being investigated by the Office of the United States Trade Representative (USTR) under Section 301 of the 1974 Trade Act. The investigation into Malaysia involves two main issues: excess production capacity and forced labor.
"Of the 60 countries being investigated, Malaysia is under investigation involving two issues: excess production capacity and forced labor. Regarding the forced labor issue, the investigation is almost complete, and we have been given indications that after July 24, a 10 percent tariff proposal is likely to be imposed. However, the investigation regarding excess production capacity has not yet been finalized," he said when answering a question from Datuk Seri Hamzah Zainudin (PN-Larut) about the current status of the Malaysia-US Trade Agreement (ART).
Ongoing Investigation Process
Johari emphasized that the proposed tariff is not yet in effect because the US government allows involved countries to submit responses before the final decision is made. The investigation process is still ongoing, and the 10 percent tariff has not yet been enforced.
"The US government still provides space for involved countries and interested parties to submit written feedback and attend public hearings before the final decision is announced. The government through MITI will continue to participate in the process to ensure that Malaysia's interests and views are appropriately considered," he said.
According to him, Malaysia has previously submitted written comments, participated in public hearings, and taken part in consultations for both investigations conducted by USTR. These actions show Malaysia's commitment to cooperating transparently in addressing the issues raised.
US Recognition of Malaysia's Commitment
Johari said that the proposed tariff rate for Malaysia is lower than the 12.5 percent proposed for other countries. This difference is because the US recognizes Malaysia's commitment to implementing provisions under the Malaysia-US Trade Agreement (ART), particularly regarding the issue of forced labor.
"Although the proposed tariff has not been finalized, the government will continue to negotiate with USTR to ensure that Malaysia's trade interests are maintained," he said.
Implications for Malaysia's Economy
This proposed tariff has raised concerns among local industry players, especially the manufacturing and service sectors that rely heavily on exports to the US. Malaysia is one of the main trading partners of the US in Southeast Asia, with bilateral trade reaching tens of billions of ringgit each year. If a 10 percent tariff is imposed, it could affect the competitiveness of Malaysian products in the US market and lead to increased operational costs for local companies.
However, the Malaysian government is optimistic that the ongoing negotiations will result in a fair solution. With the US recognition of Malaysia's efforts in addressing the forced labor issue, there is still an opportunity to avoid or reduce the tariff.
Actions Taken by the Malaysian Government
The Ministry of Investment, Trade and Industry (MITI) has taken various measures to ensure Malaysia's interests are protected. Among the actions taken include holding consultations with USTR, submitting written responses, and attending public hearings. The government is also actively strengthening laws and enforcement related to forced labor, including amendments to the Minimum Standard of Housing and Worker Facilities Act 1990 (Act 446) and implementing a stricter Foreign Worker Management System.
In addition, Malaysia continues to cooperate with international organizations such as the International Labour Organization (ILO) to improve compliance with international labor standards. These actions are seen as proactive efforts to address the concerns of the US and other countries regarding the issue of forced labor.
Conclusion
This 10 percent tariff proposal by the US is a major challenge for Malaysia's economy, but the government is confident in the country's ability to negotiate diplomatically. With the commitment already shown, Malaysia hopes that the final USTR decision will take into account the efforts already implemented. The public and industry players are advised to continue monitoring the developments and be prepared for any possibilities.
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*Original source: [kosmo.com.my](https://www.kosmo.com.my/2026/06/23/malaysia-berdepan-cadangan-tarif-10-peratus-as-berkaitan-buruh-paksa/)*