Malaysia is in a good position to negotiate with the US on the sweeping tariff increase that has since been temporarily put on hold, MARC Ratings said on Thursday.

US’ reciprocal tariffs could trigger a “constructive negotiation” akin to the renegotiation of the North American Free Trade Agreement into the US – Mexico-Canada Agreement, the rating agency said. Such an outcome, however, would require multilateralism, predictability, and shared goals, it noted.

“On that note, Malaysia’s position in negotiations is strengthened by its role as Chair of ASEAN, and its participation in multiple trade blocs,” MARC Ratings said in a statement.

Overnight, US President Donald Trump said he would pause the planned increase in reciprocal tariffs on non – retaliating countries. Malaysia had earlier said it would try to talk it out with the Americans, rather than fight back after being slapped with a 24% blanket tariff.

“I have authorized a 90 day pause, and a substantially lowered reciprocal tariff during this period, of 10%, also effective immediately,” Trump said in a social media post.

Further, MARC Ratings said its sensitivity analysis suggests that the impact of tariffs on Malaysia would be manageable, with economic growth forecasts likely to fall towards the “lower end of the historical range observed during a standard economic cycle”.

Malaysia’s gross domestic product (GDP) is “buffered by its strong, domestically driven economic base” at almost two-thirds of its economic output, the agency said.

If the tariff goes ahead, however, Malaysia’s GDP growth could decline by up to one percentage-point per year, when coupled with a decline in regional and global growth, according to MARC Ratings’ estimates.

“Furthermore, the adverse effects of the trade war are likely to persist into 2026,” the agency flagged.

• The Edge Malaysia