South China Morning Post - 03 January 2026
Fair or fowl? Malaysia struggles to stomach its US trade pact
By Joseph Sipalan
Janice, a Kuala Lumpur-based food entrepreneur and chef, is in a foul mood as she laments the inferior quality and taste of US-produced chicken and eggs. Yet she concedes that she may have to stomach this unwelcome change in the local poultry market, at least for now.
Malaysia is bracing itself for a surge in American poultry shipments under an “agreement on reciprocal trade” signed with Washington in October. The deal opens the Southeast Asian nation to more US exports of food, cars and machinery, in exchange for a reduced 19 per cent tariff on Malaysian goods entering the world’s largest economy.
“Their beef is good, but their poultry is not hygienic,” said Janice, 41, who asked to be identified only by a pseudonym for fear of reprisals against her business. “We can eat our eggs raw. They cannot do the same.”
For the US poultry lobby, which represents large agribusiness producers that rear nearly half a billion birds each year, the issue is a numbers game. It has pushed hard for American chicken meat to be sold to Washington’s trade partners, even as it seeks curbs on poultry imports to protect domestic farmers.
The lifting of Malaysia’s ban on US poultry – imposed in 2022 over avian flu concerns – reflected “confidence in the safety and quality of US products”, the USA Poultry and Egg Export Council said in a statement welcoming the agreement signed during US President Donald Trump’s visit to Kuala Lumpur in October.
Janice, who has built a reputation for experimental, well-received cuisine at pop-ups around Kuala Lumpur, said locally raised chickens were superior to those bred in the United States.
In August, Malaysian consumer groups demanded a ban on poultry cleaned with chemical washes: a method widely used by US producers to kill bacteria such as salmonella in processed chicken.
While Janice plans to keep a close eye on the chicken market, she worries that the deal between Malaysia and the US could force her to rethink her business strategies.
“Do we start buying and consuming lousy US poultry and sell our good stuff to Singapore?” she asked. “Is it going to be cheaper? Will it be safe? We really don’t know what’s going to happen. It’s just crazy.”
Like Janice, other Malaysian consumers and businesses have voiced concerns about American goods. On social media, they bemoan the quality and price of US cars, dairy products and grains such as sorghum and corn, all of which are expected to enter the Malaysian market in greater volumes under the trade deal.
Critics have accused Prime Minister Anwar Ibrahim’s administration of hastily signing a deal that is lopsided in Washington’s favour to appease Trump.
The deal’s signing by Trump and Anwar on the sidelines of October’s Asean summit was among the highlights of the US president’s first visit to Asia since his return to the White House for a second term last January. When Trump landed in Kuala Lumpur, the two leaders appeared in sync, even dancing together as performers lined the red carpet.
But the agreement has triggered discord in Malaysia.
Anwar’s administration sold the deal, which grants tariff exemptions for some Malaysian goods such as semiconductors, palm oil and rubber products, as crucial to reducing the overall tariff rate following months of threats from Washington over bilateral trade.
Still, the new trade minister, Johari Abdul Ghani, has said the government may seek to renegotiate elements of the pact “where terms are not fair”.
“We cannot reverse what has already been signed … [but] this is not a point of no return,” Johari said on December 17, his first day in office.
“If something is unfair, it must be negotiated,” he added, noting that the deal could expose Malaysia’s small and medium-sized enterprises, which make up over 90 per cent of the country’s registered businesses, to greater vulnerabilities.
Sovereignty concerns
The agreement helps preserve a semblance of trade balance in Southeast Asia, as Trump has imposed tariffs of 19 or 20 per cent on most of the region’s major economies.
A key point of contention is a clause requiring Malaysia to “adopt or maintain” measures similar to any prohibition or restriction the US imposes on countries it deems a threat to its economic or national security.
Anwar’s opponents, chiefly his arch-rival and two-time former prime minister Mahathir Mohamad, have argued that the provision effectively gives Washington the power to dictate how Malaysia conducts its trade and with whom.
Although the deal does not name countries considered hostile to US interests, China is widely thought to be among them.
On December 2, Mahathir lodged a police report against Anwar, accusing him of undermining the constitution. He went further to claim that the agreement removed long-standing positive discrimination policies protecting Malaysia’s Malay‑Muslim majority – a move he said violated the law without the consent of the king or parliament.
“There are many clauses stating that our country’s powers are handed over to the United States, requiring us to refer actions to them and allowing them to determine what can or cannot be done,” said the centenarian, a long-time adversary of Anwar.
One especially sensitive issue is the perceived easing of Malaysia’s halal standards, long regarded as the gold standard by many Muslim-majority nations.
A clause in the agreement seeking to “streamline certification” for US food and agricultural products – including poultry and beef, the two most-consumed meats by Malaysia’s nearly 20 million Muslims – has raised fears that it could expose consumers to products falling short of strict halal requirements.
Anwar and former trade minister Tengku Zafrul Aziz, who led Malaysia’s tariff-negotiation team, have assured Malaysians that the country’s halal standards will be upheld.
Analysts, meanwhile, caution against overstating the risk of Malaysia’s laws and institutions being subordinated to US interests, noting that much will depend on the fine print yet to be finalised.
“The best approach is to clarify ambiguous language, explain how obligations interact with Malaysian law, and ensure implementation stays discretionary and rules-based, not automatic,” Kamles Kumar, Malaysia lead at strategic advisory firm Asia Group Advisors, told This Week in Asia.
“This addresses sovereignty concerns without undermining the economic rationale or provoking retaliation.”
The agreement has prompted China to call on Malaysia to remain even-handed in trade negotiations.
In November, China’s Ministry of Commerce urged Malaysia to carefully weigh its options and “act in its own long-term interests” when signing any trade deal, though it did not name a specific country.
“Any such agreement should not negatively impact global trade development and regional cooperation, nor should it harm China’s interests,” a ministry spokesman said.
The US continues to bar China from obtaining advanced semiconductors used in artificial intelligence and military applications as part of an unrelenting trade and technology war between the world’s two largest economies.
Malaysia came under pressure from Washington last year to clamp down on transshipments of restricted chips after at least one case was traced to China via Malaysian ports.
The competing demands from Beijing and Washington have left Malaysia in a bind: China was its largest trading partner for 16 consecutive years until 2024, while the US remains its top export destination – especially for the crucial semiconductor sector.
Silver lining?
Despite concerns about the agreement, observers say it has spurred several positive shifts in the broader trade environment – including a renewed commitment to easing some protectionist policies.
Malaysia, for instance, imposes tariffs as high as 105 per cent on imported cars, despite having pledged to cap them at 30 per cent in line with World Trade Organization rules.
“[The US-Malaysia trade deal] is clearly lopsided, but it has forced Malaysia to review its position on certain pledges it made at the WTO that it said it would implement,” a European diplomat told This Week in Asia, requesting anonymity because of the issue’s sensitivity.
“Of course, the US is also not playing by WTO rules, so it is ironic that the deal is [only] forcing Malaysia to do what it promised the WTO it would do.”
Malaysia’s review of its tariff policies comes after its trade representatives and their European counterparts resumed talks on a deal last January. The country is also pursuing similar agreements with Japan, South Korea and India as part of efforts to diversify its trade and cushion the impact of Trump’s tariffs.
Analysts say such reforms could help strengthen sectors like agriculture and vehicle manufacturing, which have long benefited from protectionism and subsidies.
“The deal has made the government look into its trade policies, potentially levelling the playing field,” said Timothy Wong, a senior analyst at BowerGroupAsia. “Which could help increase competitiveness and innovation for local companies.”
