Trump Administration strikes trade agreements with four Southeast Asian countries

Key takeaways

• The United States will maintain the reciprocal tariff rates currently in place, but will allow some goods to avoid tariffs—corresponding to categories identified in Annex III to Executive Order 14,346 of September 5, 2025. The goods in Annex III predominantly fall in four classes:

(1) Aircraft and parts;

(2) Generic pharmaceuticals and their ingredients;

(3) Unavailable natural resources and closely related derivative products; and

(4) Certain agricultural products.

• Cambodia, Malaysia, Thailand, and Vietnam all agreed to lower tariffs on most U.S. exports.
• The agreements also address non-tariff barriers and provide commitments on forced labor.
• Key commitments also include cooperation on critical mineral issues, elimination of digital services taxes, large purchases of U.S. goods, and investment pledges.
• The Trump Administration’s position on rules of origin (ROOs) and transshipment issues remains unclear, as the announcements offer no substantive details.

U.S. reciprocal tariffs remain

The Cambodia, Malaysia, Thailand, and Vietnam agreements lock in the U.S.’s current reciprocal tariff rates, while allowing the four countries to avoid the higher rates initially threatened as part of the April reciprocal tariff announcement. Indeed, the U.S. will maintain a 19 percent reciprocal tariff rate on Cambodian, Malaysian, and Thai imports as well as a 20 percent rate on Vietnamese imports. Notably, the agreements do not exempt products from any Section 232 tariffs and confirm that reciprocal tariffs are in addition to ordinary Most Favored Nation (MFN) duties.

Only those products listed in the schedules of the particular agreements will avoid the reciprocal tariff rate. Schedule 2 of the Cambodia and Malaysia agreements identifies exempted products that include agricultural goods, generic pharmaceuticals and chemicals, and natural resources like metal ores. The specific Thai and Vietnamese products that will be exempted from the reciprocal tariffs under any final agreement are yet-to-be-determined.

Substantially reduced tariffs on U.S. products

The agreements secure considerable market access gains for U.S. exporters. Cambodia agreed to “eliminate tariffs on 100 percent of U.S. products.” Similarly, Malaysia “has committed to provide significant preferential market access for U.S. products . . . including chemicals, machinery and electrical equipment, metals, passenger vehicles, dairy, horticultural products, poultry, pork, rice, and fuel ethanol.” In addition, according to their respective joint statements, Thailand committed to “eliminate tariffs on 99 percent of goods, covering a full range of U.S. industrial and food and agricultural products” and Vietnam will “provide preferential market access for substantially all U.S. industrial and agricultural exports.” Importantly, these reductions are specific to the U.S. and ostensibly will not be extended to exporters from countries without deals.

Non-tariff barriers addressed

All four countries agreed to address certain non-tariff barriers, some of which have been sources of friction. For example, Malaysia and Cambodia agreed to accept U.S. manufactured vehicles built to U.S. motor vehicle standards, recognize U.S. Food and Drug Administration certifications and prior marketing authorizations, and ensure that Sanitary and Phytosanitary Measures (SPS)—e.g., measures to protect animal, plant, or human health, such as food safety protocols—do not act as disguised restrictions on trade. The Malaysia and Cambodia agreements also require both countries to treat the decisions of U.S. conformity assessment bodies—bodies that test whether products meet technical regulations—no less favorably than they do decisions of their own bodies. Additionally, according to their respective joint statements, Thailand agreed to issue import permits for U.S. ethanol and dismantle a reward system related to customs breaches, while Vietnam pledged to streamline regulatory requirements for U.S. pharmaceutical exports and allow the import of U.S. remanufactured goods.

New import bans on forced labor

The agreements with Malaysia and Cambodia include a requirement for both countries to adopt and implement prohibitions on the importation of “goods mined, produced, or manufactured wholly or in part by forced or compulsory labor.” The agreements provide that each party “may”’ elect to acknowledge U.S. government determinations on entities under Section 307 of the Tariff Act of 1930. This language potentially enables the countries to reach entities on the Uyghur Forced Labor Prevention Act (UFLPA) Entity List. In addition, both countries agreed to specific labor commitments. For example, Malaysia must expand efforts to inform migrant workers of their rights, increase transparency around migrant worker quota systems, and prohibit the charging of recruitment fees prior to a worker’s migration to Malaysia. Similarly, Cambodia agreed to amend its Trade Union Law to fully protect workers’ rights to freedom of association and collective bargaining and establish labor courts to hear labor disputes.

Key commitments on digital services, critical minerals, and investment

Among the additional obligations of significance outlined in the agreements are high-profile procurement commitments (including Malaysian, Thai, and Vietnamese purchases of Boeing aircraft and U.S. agricultural products), promises to eliminate digital services taxes and to refrain from imposing customs duties on electronic transmissions, certain assurances that Malaysia will continue to develop capacity to produce and refrain from banning exports of critical minerals, and a $70 billion Malaysian “capital fund” established to invest in American industry.

Increased cooperation on China

The Malaysia and Cambodia agreements provide that, in areas where the U.S. imposes import restrictions for security reasons, both countries must adopt or maintain equivalent measures if the United States requests that they do so. Additionally, both countries agreed to address the unfair trade practices of companies owned or controlled by third countries operating within their respective jurisdictions, and to cooperate with the U.S. on export controls, sanctions, and investment screening. Vietnam and Thailand also agreed to similar areas of cooperation. These commitments are most likely aimed at addressing China-related issues; however, China is not mentioned in the joint statements, fact sheets, or agreements.

Agreements decline to clarify Trump Administration position on Rules of Origin (ROOs) and transshipment

ROOs are mentioned only in passing, and do not further illustrate how the Trump Administration will leverage these rules to prevent China from skirting U.S. tariffs through transshipment—the process of shipping components to third party countries to be manufactured into finished goods, thereby avoiding costly tariffs. In fact, the Malaysia annex intentionally leaves the ROO section blank, providing potential flexibility for the United States to impose future ROOs that could render products with Chinese content percentages above certain thresholds ineligible for preferential tariff treatment.

Following an earlier announcement with Vietnam that tariffs would double for transshipped products (from 20% to 40%) and a steel deal with the UK that included “melt and pour” restrictions, many believe the Trump Administration is considering ways to depart from the traditional “substantial transformation” test for determining origin. Instead, the Cambodia and Malaysia agreements simply state that the parties can establish ROOs to ensure the agreement only benefits the bilateral relationship.

Authored by Joshua Kurland, Mayur Patel and Stephen Finan.