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Malaysia Buys Time With Trump

With the leverage of reciprocal tariffs, announced on liberation day in April and implemented from August, Donald Trump has so far wrested around fifteen advantageous bilateral agreements with the United Kingdom, the EU, Japan, South Korea, Indonesia, Australia, Argentina, and other smaller countries in Asia, Latin America, and Europe. Due to its unique characteristics, the agreement with Malaysia stands out and is considered by the White House a model, demonstrating the strategic ambitions of the tariff war.

An Article 5

At the end of October, the Malaysian government hosted the 47th summit of the Association of Southeast Asian Nations (ASEAN), celebrating the accession of East Timor as its 11th member. At the ASEAN summit in Kuala Lumpur, Trump announced two framework agreements with Vietnam and Thailand, and two reciprocal trade agreements with Malaysia and Cambodia. These results went relatively unnoticed in the international press, which focused on the next stages of the American president’s Asian tour: his meeting with the new Japanese Prime Minister Sanae Takaichi in Tokyo and the long-awaited talks with Chinese President Xi Jinping in South Korea.

Like the other agreements extorted by the White House under the threat of tariffs, the deal with Malaysia is unbalanced and coercive. Prime Minister Ibrahim Anwar’s government promised to open the country to American goods, large purchases of Boeing planes and gas, and $70 billion in investment in the US over a decade. In exchange, Trump only agreed to reduce the reciprocal tariffs on Malaysian exports from 32% to 19%, albeit with many sectors exempted. A novelty of the agreement is the presence of a traditional legal text, nearly 500 pages long, containing detailed provisions and binding commitments, a formal structure absent in other bilateral agreements announced by Trump. Politically, the most substantial difference is Article 5, which commits the Malaysian government to align with any restrictions that may be adopted by the US against other countries for reasons of economic or national security. And, conversely, in the event that Malaysia were to establish relations with a government that threatens American interests, Washington reserves the right to annul the agreement and raise tariffs.

Forced moves

This commitment to an alignment with Washington’s trade policy has sparked a controversy in Malaysia that resembles the one triggered in Europe by the unpalatable July agreement at Turnberry, both in the rhetoric of capitulation used by critics of the deal, and in the realist arguments of the Commission led by Ursula von der Leyen. The Malaysian opposition has called for Anwar’s resignation, denouncing a surrender to American colonialism and the destruction of the active neutrality, which is the guiding principle of diplomacy in Kuala Lumpur. In early December, the centenarian Mohamad Mahathir, former prime minister and a historic leader of Malaysian nationalism, filed a complaint against Anwar with the police for an unconstitutional act, accusing him of harming the national interest and sovereignty and allowing the US to dictate who we can do or not do business with.

Malaysia’s Trade Minister Aziz Zafrul explained in Parliament that Malaysia had no choice and therefore achieved the best possible outcome given the balance of power with the world’s leading power, which is also one of the major destinations for Malaysian exports [The Guardian, November 5th]. In an interview with Alan Beattie of the Financial Times, Zafrul assured the British daily that the government will act solely in the national interest: There’s a consultation process, and if it’s not in our interest to follow the US we won’t, even at the cost of higher tariffs and other potential consequences. Zafrul emphasised Malaysia’s autonomy, recalling that the day after the agreement with the US, the country participated in the ASEAN group’s free trade pact with China.

The time factor

According to Beattie, the agreement, taken literally, seems like formalised coercion and would turn Malaysia into a geoeconomic US vassal state. In reality, the Anwar government has evidently calculated that it can negotiate its way out of any disastrously damaging obligations [Financial Times, November 6th]. Even in the Malaysian strategic debate, the prevailing idea seems to be that this is a pragmatic tactic, which, in the short term, takes into account the country’s significant trade dependence on the US, but preserves room for future action.

For Amalina Anuar, an analyst at Free Malaysia Today, the agreement allows Malaysia to buy time while it works on a long-term neutral strategy; the diversification of its trade relations. For now, the agreement functions as a pause button – a way to keep one channel steady while Malaysia strongly strengthens all the others. Implementing the agreement will take months or years and, in the meantime, the situation could change, for example with the midterm elections in the US set for November 2026.

Another factor highlighted in various Malaysian comments is the more imminent possibility that the Supreme Court may rule that Trump’s tariffs are unconstitutional, reducing their capacity for blackmail. These reflections from Kuala Lumpur perhaps help explain China’s reaction, which has so far been muted, with its Ministry of Commerce merely expressing serious concerns over certain aspects of the US-Malaysia agreement [Global Times, November 28th].

Increasing pressure

Uncertainty remains as to Trump’s real strategic intentions towards China. Moreover, the Malaysian government has confirmed its strategic commitment to multi-alignment, refusing to join an American bloc characterised by its anti-Chinese stance. However, the mounting pressure exerted by the United States on all of its spheres of influence is an evident fact, acknowledged by all, and one that we must take note of. For example, it is significant that the Malaysian agreement has sparked a discussion in Indonesia, the dominant power in ASEAN, with a population of over 280 million compared to Malaysia’s 35 million, and an economy at least three times larger. Trump announced an agreement with President Prabowo Subianto in July, but the Indonesian government is still negotiating and so far rejects overly binding commitments and poisonous clauses like those imposed on the Anwar government. The Indonesian business association Apindo urges Prabowo to avoid falling into the same trap as Malaysia, making clear that negotiations with the US must be limited to trade and investments: Sovereignty is not something that we can compromise [Malaysia Now, December 12th].

The increasing American pressure is yielding results in Mexico, a large country perhaps inseparably linked to the US market. In December, at the proposal of President Claudia Sheinbaum, the Mexican Parliament approved a sharp increase in tariffs towards countries, such as China, that do not have free trade agreements with Mexico. Some foresee an evolution of the United States-Mexico-Canada Agreement (USMCA) area towards a customs union, calling to mind the fortress North America project of Treasury Secretary Scott Bessent. With his usual Trumpian premature triumphalism, adviser Peter Navarro celebrated the victory in the Financial Times: Mexico is openly aligning its tariff wall with the US to block Beijing’s predatory export machine.

Electronics and mining

The possible alignment of a relatively small country like Malaysia would not have the same impact as that of a country like Mexico – all of which is speculative – but it would allow the White House to secure an important link in global supply chains in two strategic sectors: semiconductors and rare earths. The Malaysian State of Penang, where the Californian giant Intel has been present since the 1970s, is a global centre for chip production, and Malaysia is home to significant investments in artificial intelligence, with the presence of US, Chinese, and European multinationals. In addition, Malaysia’s subsoil is rich in those critical minerals that are key raw materials for technological production. For example, the only large plant outside China for processing rare earths, built by the Australian group Lynas with Japanese capital, is in Malaysia. In 2024, the Malaysian government imposed limits on the export of raw rare earths to promote refining and other higher value-added processes within its own territory, similar to Indonesia’s strategy regarding nickel.

In the mining and IT sectors, Malaysia has openly declared a dual approach: opening up to international capital and indiscriminately welcoming multinational companies from both old and new powers, but with conditions designed to favour Malaysian industrial and technological development, extending beyond mere mineral extraction and semiconductor assembly. The small Asian nation plays its cards as an emerging economy, claiming strategic equidistance, but it is objectively seized by the titanic forces of the imperialistic contention between the world’s great powers, fighting for the partition of the planet’s markets and resources.

American continuity

The agreement with Malaysia is also of interest due to the open approval it has received from key areas of bipartisan American strategic thought, as explored in other pages of the newspaper. Michael Froman, former US trade representative under President Barack Obama and current president of the Council on Foreign Relations (CFR), sees the contours of a trade strategy beyond tariffs emerging, aligned with foreign policy. Geoffrey Gertz, who has served in the State Department and in President Joe Biden’s National Security Council, cannot hide his enthusiasm: This is the direction trade policy needs to move in, placing the imperative of economic security at its centre.

Aside from its aggressive tone and more bilateral approach, Trump’s trade strategy, in fact, is fundamentally similar to the Biden administration’s friendshoring strategy: favouring trade in goods, raw materials, and capital with friendly countries inevitably implies a certain degree of decoupling from the enemy camp. It is the confirmation of a substantial continuity, that we have highlighted on other occasions, in the alternation of Democratic and Republican presidencies in the United States, starting from the new strategic phase and even more so in the current crisis in the world order. From Bush Jr. to Obama, from Trump to Biden, and then back to Trump, the prevailing trend has been the management of America’s relative decline and the attempt to counter it with unilateral moves, making use of all the tools of the imperialist contention, from tariffs to missiles.

Lotta Comunista, December 2025

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