Malaysia has walked out of its trade deal with the United States, becoming the first country to abandon an agreement negotiated under Washington’s reciprocal tariff strategy. The move could encourage several other U.S. trading partners to reconsider similar deals.
On 15 March 2026, Malaysia’s Minister of Investment, Trade and Industry, Johari Abdul Ghani, announced that the Agreement on Reciprocal Trade (ART) between Malaysia and the United States was now “null and void.”
The decision followed a February 20, 2026 ruling by the U.S. Supreme Court that struck down reciprocal tariffs imposed by the administration of Donald Trump under the International Emergency Economic Powers Act (IEEPA).
The court ruled that the president did not have authority under that law to impose broad tariffs, removing the legal foundation of the agreement.
“It is not on hold. It is no longer there, it’s null and void,” Johari said, adding that the United States may now rely on other tools such as tariffs under Section 122 or investigations under Section 301.
The agreement had been signed on 26 October 2025 in Kuala Lumpur by Anwar Ibrahim and Donald Trump. At the time, Tengku Zafrul Aziz served as Malaysia’s Minister of Investment, Trade and Industry and led the negotiations.
Under the deal, Malaysia avoided tariffs that had initially reached 47%, negotiating reductions first to 24% and later to about 19%. In return, Malaysia agreed to provide deeper market access and policy concessions to the United States.
Malaysia’s move highlights a growing dilemma for countries that signed similar deals with Washington. After the February 20, 2026 U.S. Supreme Court ruling, the reciprocal tariff policy that supported those agreements collapsed. The Trump administration then imposed a uniform 10% tariff under Section 122, applied equally to all trading partners.
GTRI Comment
Two factors are likely to push more countries to walk away from trade deals signed with the United States under the reciprocal tariff strategy. First, the deals have lost their economic value after the U.S. Supreme Court ruling.
The European Union, Japan, South Korea, Vietnam, Indonesia, Bangladesh and India had accepted tariffs of 15–20% and offered significant concessions on market access, procurement and regulations. But after the court struck down the reciprocal tariff policy, Washington imposed a uniform 10% tariff on all trading partners, meaning countries with trade deals now receive the same treatment as those without one.
The preferential advantage promised by these agreements has therefore disappeared.
Second, trade pressure from the United States continues even after agreements are signed. On 11–12 March 2026, the Office of the United States Trade Representative (USTR) launched two new Section 301 investigations against several major economies including those the US had signed a trade deal over industrial policies and forced-labour concerns.
This signals that even countries that negotiated trade arrangements remain exposed to new U.S. investigations and potential tariffs.
For many governments, this combination raises a fundamental question: why maintain politically costly concessions if the same tariff treatment applies without a deal and trade pressure continues anyway? Malaysia’s decision to declare its agreement void may be followed by many other countries.
Ajay Srivastava is the Founder of the Global Trade Research Initiative
