Malaysia Seeks Reduced Trump Tariffs, Resists US Demands on Electric Vehicles and Foreign Ownership

Malaysia is seeking to lower US tariffs threatened by President Donald Trump to around 20%. However, the country is resistant to certain US demands, particularly regarding electric vehicles and foreign ownership. Prime Minister Anwar Ibrahim's negotiators are attempting to negotiate a tariff that works for both sides.

Malaysia is seeking to lower US tariffs threatened by President Donald Trump to around 20%, according to sources familiar with the ongoing negotiations. Prime Minister Anwar Ibrahim's negotiators are aiming for a tariff lower than the 25% set to take effect on Aug. 1, aligning it closer to the levels of regional neighbors Indonesia and Vietnam [1].

Malaysia has made progress addressing US concerns over the smuggling of high-performance semiconductors, but has resisted demands for an extension of tax breaks on American electric vehicles (EVs), a reduction of foreign shareholding limits in the politically-sensitive power and financial sectors, and a cut in subsidies for local fishermen [2, 3]. The country is scheduled to end its policy of tax exemptions for imported EVs in December, which has been a contentious issue in the negotiations [4].

Prime Minister Anwar Ibrahim has drawn a "red line" on national policies, including its preferential treatment of Malays and indigenous people, stating that these policies are non-negotiable [5]. The US has cited Malaysia's halal import rules and Bumiputera equity requirements as barriers, leading to the initial 24% tariff imposed on April 2 [6].

Malaysia's resistance to the US demands comes amidst a backdrop of increasing pressure over the flow of advanced AI chips to China through the nation. The US effectively banned sales of advanced chips to China in 2022, but last week allowed Nvidia Corp. to resume shipments of its H20 chips [1].

The stakes are high for Malaysia, which has been seeking a trade deal with Washington for months. The country has previously stated that its growth target for the year, currently set at about 4.5% to 5.5%, is dependent on the level of tariff that kicks in [1].

The US had a goods trade deficit with Malaysia of $24.8 billion last year, according to data from the Office of the US Trade Representative [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-07-22/trump-tariffs-malaysia-seeks-20-levy-as-negotiations-continue
[2] https://www.freemalaysiatoday.com/category/nation/2025/07/21/no-compromise-on-bumi-policy-during-us-tariff-talks-says-anwar
[3] https://news.bloombergtax.com/international-trade/malaysia-seeks-20-us-levy-but-resists-evs-ownership-demands
[4] https://seekingalpha.com/news/4469699-malaysia-seeks-20-trump-tariff-but-resists-some-us-demands---report
[5] https://stocktwits.com/news-articles/markets/equity/malaysia-reportedly-seeks-20-tariff-cap-from-trump/ch8MdxeR5s5