Malaysia has withdrawn from a trade agreement with the United States, becoming the first country to abandon a pact negotiated under Washington’s reciprocal tariff strategy after a court ruling removed the legal basis for the policy.
On March 15, Malaysia’s Minister of Investment, Trade and Industry Johari Abdul Ghani announced that the Agreement on Reciprocal Trade (ART) between the two countries was now “null and void”.
The decision follows a February 20 ruling by the Supreme Court of the United States that struck down reciprocal tariffs imposed by the administration of Donald Trump under the International Emergency Economic Powers Act.
The court held that the president lacked authority under that law to impose sweeping tariffs, effectively removing the legal foundation of the bilateral agreement.
“It is not on hold. It is no longer there, it’s null and void,” Johari said, adding that Washington could instead rely on other trade tools such as tariffs under Section 122 or investigations under Section 301.
The agreement had been signed on October 26, 2025 in Kuala Lumpur by Malaysian Prime Minister Anwar Ibrahim and Trump. At the time, then trade minister Tengku Zafrul Aziz led negotiations for Malaysia.
Under the deal, Malaysia avoided steep tariffs that had initially reached 47%, securing reductions first to 24% and later to about 19%. In return, Kuala Lumpur agreed to provide deeper market access and policy concessions to the United States.
However, the US court ruling effectively collapsed the reciprocal tariff framework that underpinned the agreement. Following the decision, Washington imposed a uniform 10% tariff on imports from all trading partners under Section 122, removing the preferential advantage enjoyed by countries that had signed such deals.
India and US also entered into a trade agreement, under which Indian goods were to be levied 18% tariff. However, after the US court order, the tariff has come down to 10%.
Trade analysts say Malaysia’s move could encourage other US trading partners to reconsider similar arrangements. Countries including the European Union, Japan, South Korea, Vietnam, Indonesia, Bangladesh and India had accepted tariffs in the range of 15–20% while offering concessions on market access, procurement and regulations.
With the US now applying the same 10% tariff rate to all partners regardless of agreements, the economic incentive to maintain politically sensitive concessions has weakened.
Additional pressure has also emerged from new US trade actions. On March 11–12, the Office of the United States Trade Representative launched fresh Section 301 investigations into several major economies over industrial policy and forced-labour concerns, including some countries that had already negotiated trade arrangements with Washington.
Analysts say this combination — loss of tariff benefits and continued trade pressure — may prompt more governments to reassess their agreements with the United States.
Malaysia’s decision could therefore mark the beginning of a broader rethinking of trade deals concluded under the now-defunct reciprocal tariff strategy.