Malaysia is the first country to cancel the US tariff agreement

Malaysia has become the first country to officially cancel its reciprocal-tariff agreement with the United States and exit Washington's trade strategy. This withdrawal is seen as a move that could encourage other countries to take similar actions.

The decision was triggered by a 20 February 2026 US Supreme Court ruling which determined that the president lacks the authority under the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs. Because the ruling struck down the legal basis for the reciprocal tariffs, the Agreement on Reciprocal Trade (ART) is now considered "void and not in effect" rather than merely suspended, says IDN Financials.

Signed in October 2025, the deal had successfully reduced tariffs on Malaysian goods from 47% down to approximately 19%. In exchange, Malaysia provided the US with wider market access and policy concessions. Following the court ruling, the US government implemented a uniform 10% tariff under Section 122 for all trading partners.

This new 10% flat rate stripped the ART of its benefits, as Malaysia and other partners, such as the EU, Japan, and South Korea, now face the same tariff rates as countries that never made concessions to the US. Despite the dissolution of these agreements, the US has maintained pressure by launching new Section 301 investigations in March 2026 against several trading partners.