Malaysia's decision to declare its trade agreement with the United States "null and void" following a Supreme Court tariff ruling has placed Indonesia at a critical crossroads: follow its ASEAN neighbor's confrontational path or maintain Jakarta's characteristically moderate stance.
Malaysian Investment, Trade, and Industry Minister Datuk Seri Johari Abdul Ghani announced that the U.S.-Malaysia Agreement on Reciprocal Trade is now void after the U.S. Supreme Court ruled in February that President Trump's tariffs under the International Emergency Economic Powers Act were unlawful, according to Benzinga.
Malaysia becomes the first nation to formally void its U.S. trade deal, creating a potential domino effect across Southeast Asia. For Indonesia—with more than $30 billion in annual trade with the United States—the stakes are considerably higher than for its smaller ASEAN neighbor.
In Indonesia, as across archipelagic democracies, unity in diversity requires constant negotiation across islands, ethnicities, and beliefs. Now that principle extends to Jakarta's delicate balancing act between economic pragmatism and regional solidarity as ASEAN members contemplate their response to Washington's trade policies.
The U.S.-Malaysia agreement, signed between Trump and Malaysian Prime Minister Anwar Ibrahim at the 47th ASEAN Summit in Kuala Lumpur last October, covered approximately 12% of Malaysia's exports to the United States and maintained a 19% reciprocal tariff on Malaysian imports with limited exceptions.
Minister Johari argued that tariff justifications based on trade surplus should specify affected industries rather than imposing blanket measures. Malaysian export sectors potentially vulnerable include electrical and electronics, oil and gas, plantation commodities including palm oil, and rubber-based products including gloves.
