Nikkei Asia | 18 March 2026
Malaysia says US trade pact 'void' in wake of court tariff ruling
by NORMAN GOH
After two days of confusing statements, Malaysia confirmed on Wednesday that its agreement on reciprocal trade (ART) with Washington is "null and void" and no longer applies in the wake of the U.S. Supreme Court striking down President Donald Trump's "reciprocal" tariffs.
The announcement makes Malaysia the first country that had reached a deal with the Trump administration over the tariffs to pull out of it in the wake of the court ruling last month. Many other nations, such as Indonesia and Cambodia, have yet to ratify similar agreements and have said they are reviewing them. Washington has urged governments that signed deals before the court ruling to honor them.
"It is not on hold. It is no longer there, it's null and void," Trade Minister Johari Abdul Ghani told the media, referring to the deal that had been signed. He added that the U.S. Supreme Court had ruled tariffs must be justified and cannot be imposed on a "blanket basis." Under the agreement signed in October, Malaysia was subject to a 19% tariff rate on most of its exports to the U.S.
"The United States must specify the reasons, including which industries are involved," he said.
The remarks follow confusion in local media over whether Johari had been misquoted when he first discussed the issue earlier this week. His press secretary told Nikkei Asia on Wednesday that the minister's statement "remains."
The U.S. embassy in Kuala Lumpur declined to comment on the minister's announcement.
An adviser to the Malaysian government, who asked not to be named, warned that the government's position carries significant risks if not managed carefully. "On a matter as sensitive as Malaysia-U.S. trade ties, the minister should be more careful when commenting," the person said, adding that remarks should be made through official channels rather than off-the-cuff responses to the press. The adviser said that conflicting reports are already creating confusion, noting that an official statement from the ministry has yet to be issued.
"This is a high-risk approach," the person said. He added that although it may yield "short-term political dividends," it could also invite "punitive action" from the U.S., beyond the already announced investigations under Section 301 of the U.S. Trade Act of 1974. This allows the U.S. Trade Representative to investigate and retaliate against foreign trade practices deemed unfair or discriminatory.
According to New Straits Times, Johari said the U.S. is currently imposing a 10% tariff on Malaysia under Section 122 of the trade act, describing it as a temporary measure for up to five months. He added that the previous 19% tariff under the ART "no longer applies," and that Washington will review whether to proceed with tariffs under Section 301.
Section 122 allows the U.S. president to impose temporary tariffs or import restrictions for up to 150 days to address balance-of-payments concerns or protect the dollar. The White House invoked the provision in an order issued on Feb. 22, imposing a 10% global tariff following the Supreme Court ruling.
Malaysian Prime Minister Anwar Ibrahim and Trump signed the agreement on the sidelines of the ASEAN Summit in Kuala Lumpur, alongside a parallel understanding on cooperation in critical minerals supply chains.
Sources close to the government told Nikkei that Anwar is hoping to meet Trump in Washington this April, in what could be a key opportunity to clarify Malaysia's position and ease tensions over trade policy.
Meanwhile, analysts say mixed messaging risks undermining confidence at a time when U.S. trade policy is increasingly fluid. Amir Fareed, director at the KRA Group consultancy, said the discourse surrounding the ART "merits careful consideration," noting that Washington places strong emphasis on the stability of concluded agreements.
"The initial ambiguity regarding the ART's status, even after subsequent clarifications, introduces an element of uncertainty that could be minimized," he said. In the current global environment, he stressed that "clarity and consistency are highly valued" and such moments can have an outsized impact on perceptions that underpin bilateral trust. Amir added that this is particularly critical as Malaysia navigates a shifting U.S. trade landscape, where policy signals can change rapidly.
"Ensuring absolute clarity and consistency in messaging helps prevent unintended misinterpretation that could affect areas of mutual economic interest," he said, pointing to the semiconductor sector as a key area where both countries have strong strategic alignment.
Hafidzi Razali, founder and chief executive of Strategic Counsel, a research agency, said the U.S. may be looking at broader measures to "rebalance" trade ties.
"For now, Malaysia can choose to remain engaged," he said. "The unpredictability will not end there, especially as the U.S. begins to look into other trade-related areas such as labor."
