Malaysia has withdrawn from its trade agreement with the United States and become the first country to exit Washington’s reciprocal‑tariff strategy. The move opens the door for other countries to take similar action.

According to StratNewsGlobal, Malaysia’s Minister of Investment, Trade and Industry, Johari Abdul Ghani, stated that the Agreement on Reciprocal Trade (ART) between the two countries is no longer in force. The decision follows a ruling by the US Supreme Court on 20 February 2026 that struck down the reciprocal tariffs previously imposed by the Donald Trump administration.

The court found that the president does not have the authority under the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs. The ruling removed the legal foundation of the trade agreement.

The ART agreement was signed on 26 October 2025 in Kuala Lumpur by Anwar Ibrahim and Donald Trump. Under the deal, Malaysia succeeded in reducing tariffs from 47 percent to 24 percent and later to around 19 percent. In return, Malaysia granted the US wider market access and several policy concessions.

The situation changed after the US Supreme Court overturned the reciprocal tariff policy. The US government then imposed a uniform 10 percent tariff under Section 122 on all trading partners, eliminating the tariff advantages previously secured through the agreement.

This development stripped the agreement of its economic value. Countries such as the European Union, Japan, South Korea, Viet Nam, Indonesia, Bangladesh and India had previously faced tariffs of 15–20 percent and offered various concessions. They now face the same tariff rate as countries without agreements.

Trade pressure from the US has also continued. On 11–12 March 2026, the Office of the US Trade Representative launched a new investigation under Section 301 targeting several countries, including those that had signed trade agreements.

Source: IDN Financials

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