Mahathir says M'sia shortchanged in Anwar's tariff deal with Trump, M'sia trade minister hits back

About a week after U.S. President Donald Trump announced a tariff deal between the U.S. and Malaysia, former Malaysian Prime Minister Mahathir Mohamad alleged that his country had been shortchanged.

Terms of the deal

Talks between both leaders over a phone call on Jul. 31 saw Malaysia imposed with a 19 per cent tariff rate, down from their original 25 per cent.

As part of the agreement, Anwar conceded to Trump on a number of issues, including halal certification and the supply of rare earths, a key mineral in advance technological applications.

Malaysia did not, however, give in to a number of U.S. demands they deemed would jeopardise key national policies or interests, Malaysia's Trade Minister Tengku Zafrul Aziz confirmed.

These include giving the U.S. exclusive access to Malaysia's supply of rare earth elements, as well the Malaysian government's right to access source code transfers for key sectors, he said.

Analysts have found that the deal between both countries could come at a US$240 billion (S$308 billion) cost to Malaysia.

Zafrul also previously warned the parliament that major firms in the country would have to fork out up to US$150 billion (S$193 billion) in the coming five years under the deal.

Nonetheless, he called the new tariff rate a "reasonable outcome".

"Trumped"

Not all were pleased with the terms of the deal, however.

In a Facebook post on Aug. 7 headlined "Trumped", Mahathir called out certain points in the agreement that he believed put Malaysia at an unfair advantage, in particular in the supply of rare earth.

Stating that rare earth fetches "only 5 per cent of the total value of the material", he said that "Malaysia should process the rare earth and extract the elements in it because the return would be as much as 30 times higher."

"Why is Malaysia so stupid as to accept only 5% of the value when we can get many times more," he criticised.

With regards to Malaysia's plans to abolish taxes on 11,000 U.S. products entering Malaysia as part of the deal to lower the tariff rate, Mahathir stated that they would be "abolishing 100% of [their] tax".

"For this we only get a reduction in U.S. tariff of only 6% (from 25% to 19%). That is not a good deal," he concluded.

Mahathir's words follow a string of criticisms he has directed at Anwar's government, including calling it "incompetent".

He has also called for Anwar's resignation, joining thousands of Malaysians in "Turun Anwar" protests in Kuala Lumpur (KL) on Jul. 26.

Zafrul fires back

"The Government seems happy with the deal they have negotiated with Trump," Mahathir wrote.

In response to his comments, Zafrul took to Facebook to pick apart the former Prime Minister's claims and defend the government's decision.

Addressing criticisms on abolishment of taxes, he clarified that only 60.4 per cent of imported goods would no longer have import taxes, not the 100 per cent that Mahathir claimed.

"This is not about Happy Tun, but a responsibility to save the rice cooker and the livelihood of the Malaysian people."

As for rare earth elements, Zafrul pointed out that there is currently no agreement "for Malaysia to supply rare earths to the U.S. or any country, exclusively or otherwise," a Cabinet decision made at the start of 2024.

"Tun's allegation is clearly FALSE," he said, adding, "It's not wrong to criticise, but if the criticism is based on false accusation, it's WRONG!"

Top images via Dr Mahathir bin Mohamad/Facebook