Malaysia negotiating to keep U.S. chip tariffs at zero ahead of potential trade deal

Malaysia is trying really hard to keep made for America chips free of tariffs in efforts to appease the Trump administration as it prepares to close a trade deal with them this Sunday, according to Bloomberg.

Malaysia’s Investment, Trade and Industry Minister Zafrul Aziz said, “It’s zero for now and I hope it continues to be so,” adding that the U.S. remains “an important market for Malaysia.”

Malaysia is already facing a 19% levy on exports to the U.S., which has raised concerns among its major electronics producers.

The trade talks come as President Donald Trump considers sweeping new tariffs on semiconductors that could go as high as 300%, a potential blow to the world’s sixth-largest chip exporter.

Trump plans trade and minerals deal at ASEAN

Trump is expected to visit Kuala Lumpur during the ASEAN summit, and Zafrul said it is “a possibility” that Malaysia will sign a critical minerals agreement with Trump.

It is unclear whether Trump actually wants a stronger foothold in Malaysia’s rare-earth and mineral-processing sectors, areas now seemingly attracting investors from China, Japan, and both Koreas.

According to Bloomberg, Malaysia has been trying to expand rare-earth mining and processing to meet global demand for materials that power electric vehicles, batteries, and renewable technologies.

Prime Minister Anwar Ibrahim announced earlier this month that the country’s sovereign wealth fund, Khazanah Nasional, would collaborate with global companies to build downstream processing plants.

The government’s plan is to make Malaysia dominant in the supply chains for clean energy and electronics, so they can reduce reliance on Chinese imports.

The discussions are expected to take place alongside the ASEAN Summit scheduled from October 26 to 28, hosted by Malaysia under the theme “Inclusivity and Sustainability.” The summit will gather leaders from the U.S., China, Japan, and all ten ASEAN nations for a series of talks on trade, regional stability, and industrial cooperation.

Japan to deepen semiconductor and AI collaboration with Malaysia

Japan is preparing to strengthen cooperation with Malaysia and ASEAN in semiconductors and artificial intelligence, said Japan’s Ambassador to Malaysia, Noriyuki Shikata.

Speaking to Bernama, Shikata explained that Tokyo’s renewed push is because of newly-elected Prime Minister Takaichi Sanae’s focus on economic security and high-value technology investment.

“We will be very interested in upgrading our industrial cooperation in strategic sectors like semiconductors, AI and rare earths,” he said.

Takaichi is traveling to Kuala Lumpur to meet Anwar and attend the ASEAN meetings. Her administration has already introduced new economic-security laws that it claims will protect the country’s critical technologies and intellectual property.

Malaysia’s Shikata pointed out that Japanese companies have supported Malaysia’s industrial growth for over four decades, from Mitsubishi Motors’ role in Proton’s development to Daihatsu’s joint venture with Perodua, which created thousands of skilled jobs. He added that many Malaysians trained in Japan are now working in universities and industries across the country.

Malaysia’s Shikata described green transition and energy security as the next stage of Japan-Malaysia cooperation under the Asia Zero Emission Community (AZEC). 

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