Will the US-Malaysia Trade Deal Herald the Return of Competitive American Cars?

A new Reciprocal Trade Agreement between the United States and Malaysia potentially reverses a long-standing dominance of non American cars.

President Donald Trump’s visit to Malaysia made headlines over the weekend, but quietly real changes are being made to the trade relationship between the two countries. A bilateral agreement, focused on enhancing reciprocity and addressing tariff and non-tariff barriers was signed yesterday, introducing two critical changes that could directly impact the automotive sector:

1. Tariff Reduction on U.S. Goods: Malaysia has committed to applying a new rate of customs duty on originating goods of the United States. Although the specific tariff schedule is not yet detailed, any significant reduction in the historically high import duties for U.S.-made vehicles would directly lower the final price for Malaysian consumers, making American brands a financially viable choice for the first time in a generation.
2. Removal of Non-Tariff Barriers (NTBs): The agreement mandates that Malaysia remove existing technical barriers, including requirements for duplicative or unnecessary testing or conformity assessments for U.S. originating goods. This streamlining of import licensing and approval processes (Article 2.1, 2.2) will drastically reduce compliance costs and accelerate the time it takes for new U.S. models to reach showrooms.

A Look Back: The American Automotive Presence

For many older Malaysians, American cars were once a common sight. Early U.S. influence saw Ford Canada importing SKD and CKD kits, leading to a period where the brand was highly popular and even operated assembly plants before closing its last one in 1980. Models like the Ford Cortina and Escort were familiar to earlier generations, before the high import and excise duties of the modern era rendered them too expensive to compete with Japanese and European marques.

Future Outlook: New Competitiveness

The new trade agreement could usher in a revival of American cars by removing the financial and bureaucratic hurdles that have protected the local market. Modern U.S. automakers are now heavily invested in Electric Vehicles (EVs) and advanced technology, and competitive pricing resulting from tariff cuts could make models from brands like Ford (e.g., Mustang Mach-E) or General Motors (GM) far more attractive.

Furthermore, the agreement’s push for a level playing field and its mechanisms to address unfair practices by third-country State-Owned Enterprises (SOEs) operating in Malaysia could improve the commercial ecosystem for U.S. firms. For Malaysian consumers, this trade deal represents a promising shift toward greater choice and more competitive pricing for high-quality, fully imported American vehicles.