KUALA LUMPUR, Aug 27 — The Ministry of Investment, Trade and Industry (Miti) has reiterated that Malaysia remains in an overall competitive position despite the new tariff rates imposed on the country by the United States.
Miti stated that the government's decision not to take retaliatory action, but instead to pursue prudent negotiations, has yielded pragmatic and balanced results.
On July 31, 2025, the United States announced the imposition of reciprocal tariffs on Malaysia at a rate of 19 per cent, effective August 8, 2025.
Miti said that although the tariff rate had been reduced from 25 per cent, there will be some impact, although at a minimal level compared to before.
"The imposition of the tariff is expected to have a direct impact on the demand for Malaysian products in the US market. This is because the increased tariffs will lead to higher import costs, which in turn will raise product prices in the US, and there is a possibility that US importers may pressure Malaysian exporters to bear the cost of these reciprocal tariffs," it said in a written response on the parliament's website yesterday.
Miti made the statement in response to a question from Senator Datuk Mustafa Musa regarding the US tariffs’ impact on Malaysian industries.
On a related topic, Miti said that transhipment activities have not been fully clarified in terms of enforcement implementation as the US has not outlined any details.
“The latest US executive order stipulates that goods identified by the United States Customs and Border Protection (CBP) can be subject to tariffs of up to 40 per cent instead of the original reciprocal rate,” it said.
The ministry noted that transhipment activities do not conflict with the laws of any country as they are part of a global business strategy.
“However, transhipment involving the abuse of Certificate of Origin (COO) to circumvent or avoid import duties is an act that violates regulations,” it said, replying to a question from Senator Rita Sarimah Patrick Insol regarding the impact of US tariffs on the volume of transhipment cargo handled at Malaysia’s main ports.
Miti said the ministry has fully taken over the issuance of Non-Preferential Certificates of Origin (NPCO) for Malaysian products exported to the US, effective May 6, 2025, which were previously issued by business entities.
Among the improved NPCO criteria are that goods must be sourced or produced entirely in Malaysia, have at least 25 per cent local content, and undergo significant changes in tariff classification.
Miti has also tightened controls by increasing audits of exporting companies, working with the US authorities to combat ‘origin-washing’, and reminding the industry that false origin information can damage the country’s reputation and carry the risk of trade sanctions.
The ministry said the government will continue to monitor current developments to ensure the country remains a transparent and trusted logistics hub with integrity in the Southeast Asian region.
