US-Malaysia tariff deal set for Aug 1 after Trump-Anwar phone call

KUALA LUMPUR – United States President Donald Trump and Malaysian Prime Minister Anwar Ibrahim engaged in a long-awaited phone call on July 31, just a day ahead of Washington’s Aug 1 deadline before a

25 per cent tariff is levied on Malaysian exports

.

Official sources told The Straits Times that a deal to lower the US tariff rate to a maximum of 20 per cent or as low as 15 per cent “should be” announced by Aug 1. Kuala Lumpur conceded on several issues, including halal certification and the supply of rare earths, a critical mineral used in advanced technological applications.

“The call was made earlier this morning after it was proposed by the Americans just a few hours back,” said a top Malaysian government official with direct knowledge of the matter.

Datuk Seri Anwar also confirmed the 6.50am call during an afternoon speech in Parliament, saying that “after the discussion and some clarifications that I made, he decided to postpone the announcement of the tariff rate to tomorrow”.

The Premier added that Mr Trump

confirmed he will attend the next Asean Summit

, to be hosted by Kuala Lumpur, in October.

The Trump administration has struck deals with several other Asian countries, including Indonesia, Japan, the Philippines, South Korea and Vietnam ahead of the Aug 1 deadline. Malaysia is under pressure to similarly lower levies on RM200 billion (S$60 billion) worth of goods to its largest export market.

Even then, many countries are still locked in further discussions with US officials to iron out details from inclusions to implementation and enforcement matters.

According to several Malaysian trade and economic officials, KL is set to recognise US halal certification on several products, including pharmaceuticals, as “their certification is quite good” and the Malaysian Islamic Development Department, the local certifying body, has vetted the process.

Malaysia is also set to supply the US with rare earth elements. The country has rare earth deposits of more than 16 million tonnes that are worth an estimated RM1 trillion. Rare earth ore mined in Malaysia is exported to China since Malaysia lacks the requisite technology to process it.

Washington has made the pursuit of rare earths a key component of its national security strategy, as China dominates production of the mineral. Various forms of rare earths are used in a wide range of tech equipment from mobile phones and power generators to defence technology.

Since negotiations began, Malaysia has already increased its purchase of US gas and tightened controls on “origin washing” and movement of AI chips, both aimed at curbing Chinese evasion of trade sanctions.

However, Mr Anwar has said that interference with national economic policies such as the longstanding and politically sensitive equity quotas for bumiputeras – a term used to collectively refer to its Malay majority and indigenous tribes – was a “red line”.

Ceasefire momentum

The Anwar-Trump phone call occurred after US Secretary of State Marco Rubio spoke with Malaysian Foreign Minister Mohamad Hasan on July 30 (US time) on

the ceasefire that Kuala Lumpur facilitated

between Thailand and Cambodia in their ongoing border dispute.

Mr Anwar facilitated the successful peace talks on July 28 after Mr Trump

threatened to halt tariff negotiations

with Thailand and Cambodia unless they came to the table to end the two-month-long conflict that has killed dozens.

There was initially no sign of a meeting between the two feuding neighbours even after Mr Anwar

had spoken separately

with Acting Thai Prime Minister Phumtham Wechayachai and Cambodian Prime Minister Hun Manet on July 24.

The meeting only materialised after Mr Trump warned both leaders on July 26 that tariff deals were off the table if the border conflict continued.

“We had to rush back from Turkey in time for the Monday talks and our protocol division was suddenly activated over the weekend to prepare for guards-of-honour,” a defence official told ST. A military delegation from Malaysia was at the Ankara Defence Show.

A joint statement by Malaysia, Thailand and Cambodia announcing the ceasefire effective July 29 recognised the US as a “co-organiser” of the talks hosted by Malaysia, with China an “active participant”.

The Malaysia ambassadors of China and the US were present at the Cambodia-Thailand meeting as observers during the formal discussions in Kuala Lumpur.

Analysts believe American involvement in the peace talks and Mr Trump’s intention to attend the Asean summit signal US diplomacy is once again active in South-east Asia.

“Economically, this is one of the most dynamic regions of the world, and Trump appreciates that,” Singapore Institute of International Affairs senior fellow Oh Ei Sun told ST. “It is also a part of the world where China has dominated for the past decade, something which Trump does not want to see unchallenged.”

Since

assuming power in November 2022

, Mr Anwar has expended significant resources on Malaysia’s foreign policy.

He had visited Beijing multiple times before Chinese President Xi Jinping’s April visit to Malaysia, which was Mr Xi’s first in more than a decade.

Meetings

with Russian leader Vladimir Putin

and support for the Brics grouping have also led observers to suggest that Mr Anwar is leaning away from the West and a US-led world order.

That Mr Anwar has not had a phone call with Mr Trump since the latter’s electoral victory in November 2024 further fanned that perception.

This was especially so since Mr Trump took calls from several other South-east Asian leaders,

including Singaporean Prime Minister Lawrence Wong

and the presidents of Indonesia and the Philippines.

Since Mr Trump

returned to office in January

, Washington has upended the post-Cold War world order, imposing tariffs on even its closest allies while doubling down on demands that allies should bear greater responsibility for their conventional defences.