Malaysia Strikes $150 Billion Tech and LNG Deal with U.S. to Ease Tariff Pressure

Malaysia has agreed to spend up to $150 billion over the next five years on U.S. technology and infrastructure equipment in key sectors like semiconductors, aerospace, and data centres, Trade Minister Tengku Zafrul Aziz announced. The move is part of a broader deal with the United States aimed at easing recently announced tariffs. The U.S. had initially threatened a 25% tariff on Malaysian goods but settled on a 19% rate starting August 8, following weeks of negotiation.

In addition, Malaysia’s state energy firm Petroliam Nasional Berhad (Petronas) will purchase $3.4 billion worth of liquefied natural gas (LNG) annually from the U.S. Meanwhile, Malaysia has also pledged $70 billion in cross-border investments into the U.S. economy over the next five years to help reduce the existing trade imbalance. As of 2024, the U.S. had a $24.8 billion goods trade deficit with Malaysia.

Other notable trade concessions include reducing or eliminating tariffs on 98.4% of U.S. imports and removing regulatory barriers such as a revenue-sharing requirement for U.S.-based tech firms operating in Malaysia. These steps mark a significant shift in Malaysia’s trade posture and are aimed at securing improved access to U.S. markets, particularly for pharmaceuticals and semiconductors.

Despite the deal, concerns remain about future U.S. tariff actions, especially targeting Malaysia’s semiconductor exports under national security grounds. Tengku Zafrul cautioned that Malaysian chip exports could still face additional scrutiny, urging continued vigilance and policy flexibility from local industry stakeholders.

The agreement reflects a pragmatic pivot by Malaysia to safeguard its export-driven economy and maintain favorable trade terms with a key global partner. It also signals a deepening of bilateral ties with the U.S. at a time when strategic sectors like energy, tech, and digital infrastructure are increasingly intertwined with foreign policy and national security considerations.

Source: Reuters