Overturning Trump with new art of the deal

2026-03-24 - 23:11

Something on social media recently caught my attention: a report that claimed Malaysia had cancelled a trade deal signed with the US last year. That surely had to be fake news! But I was happy to see Malaysia mentioned in international news, fake or not. It’s still better than hearing about us living on trees. However, it’s apparently true. After a recent US Supreme Court ruling that declared as illegal the tariffs President Trump imposed against the world, Malaysia said that its trade deal with the US was over, null and void. Wah. Malaysia is so brave! So daring, so in-your-face, so kick-a-man-when-he’s down! In other words, so un-Malaysian. Trump, of course, immediately imposed new tariffs under different US laws, though these new tariffs have an end date after a few months. I’m not an economist but I’m certainly interested to know more about this rather uncharacteristic decision by Malaysia, because it’s a massive policy shift that carries some risks. This “resistance” may carry a price, even if it may not be an American armada down the Straits of Malacca. But I think the risks are rather limited. For one, the US is distracted by yet another conflict, in which it is bombing Iran together with Israel. The trade deal we negotiated with the US last year certainly wasn’t offered to us in good faith. You could indeed say we signed under duress after the US pre-emptively struck us with 47% tariffs, which we successfully negotiated down to a still-hefty 19% by making big trade concessions. However, it still turned out to be a better deal than what our neighbours got. But the process was clearly nothing short of extortion – sign a deal, accept the tariffs, commit to massive purchases... or else. Dealing with a 47% tariff is economically ruinous, and it made sense to just sign whatever deal was offered to get lower tariffs. But the legal authority Trump used to impose those tariffs on the world has disappeared, even if he’s now using other legal provisions to continue imposing tariffs. One could of course argue that a deal is a deal, and we have to honour it. The reality is that the deal we negotiated with the 47% tariff sword hanging over our head is now gone. We seem to have set a precedent. Another precedent being set is the rejection by Nato countries of the US call to help allow free movement of shipping in the Strait of Hormuz. The Nato countries of 2025 would’ve never considered doing that. But perhaps this is inevitable when one overplays one’s cards. One or two pushbacks, and suddenly the dam of resentment breaks and countries start standing up to the US. You can understand Iran, and certainly China, pushing back. Iran’s insistence that only shippers that trade oil in yuan can pass through the Straits of Hormuz is a case in point. The two countries have nothing more to lose but a lot to gain in terms of their short and long term strategies. But little, nice-boy Malaysia standing up and saying “No” – that is a big surprise indeed. It’s a bold statement, with nothing nuanced about it. There’s a chance it may backfire and burn us badly. But I believe our political leaders have decided now is the time to stand up, and that there’s an advantage in being the first to do so. In an ever-changing world where the options the US gives are often “agree with everything we ask for or suffer the consequences”, more and more countries are discovering that the US may not hold all the cards after all. There’s certainly a frisson of excitement that many other countries may be able to push back more and more, and regain rights and advantages lost in 2025. For a country that is certainly not a big or even middle power – perhaps a lower-plus-plus power – that is not a bad thing at all. The views expressed are those of the writer and do not necessarily reflect those of FMT.