Malaysia will continue negotiations with the US on a lower tariff rate despite being the only Southeast Asian country to face an opposite outcome based on US President Donald Trump’s latest announcement.

Malaysia's trade ministry on Tuesday said a 25% tariff rate on its exports to the United States was not on top of an existing base tariff of 10% imposed by Washington, clarifying earlier remarks by the country's plantations and commodities minister Johari Abdul Ghani.

KUALA LUMPUR] Bank Negara Malaysia’s earlier-than-expected rate cut – the first since 2020 – is sending a sign that policymakers are bracing for a tougher second half of 2025 as trade tensions with the United States and weakening global demand cast a shadow over the country’s economic outlook.

The US is still Malaysia’s third-largest buyer for chip exports. The Southeast Asia nation is also responsible for packaging nearly 10% of the world’s semiconductors, and around 40% of its exports are electrical and electronic products. In 2024, the country sold over 575.45 billion ringgit-worth of semiconductors, equal to about $135 billion.

President Donald Trump has sent letters this week outlining higher tariffs countries will face if they don’t make trade deals with the U.S. by Aug. 1.

Malaysian chip companies are pausing investment and expansion plans as they await clearer guidance on U.S. tariff policies, according to Malaysia Semiconductor Industry Association President Wong Siew Hai.

Malaysia's Prime Minister Anwar Ibrahim on Wednesday urged Southeast Asian countries to "act with purpose" and enhance trade among each other in the face of global uncertainty, as regional foreign ministers met amid renewed jitters over U.

China has been a fierce critic of sweeping U.S. tariffs that Trump announced on April 2. He later delayed the implementation of most but China, which has said it will respond with its own tariffs on U.S. imports, now faces a deadline next month to negotiate a deal.

Malaysia remains optimistic that further negotiations will yield a positive outcome regarding the United States tariffs set to take effect on August 1, said Datuk Seri Tengku Zafrul Abdul Aziz.

Malaysia will not cross certain "red lines" in its negotiations with the United States, its trade minister said on Wednesday, as the country continues talks with Washington to lower a 25% tariff imposed on its exports.