On Sunday, October 26th, during the ASEAN Summit in Malaysia, President Trump of the United States signed a series of trade and critical mineral agreements with multiple countries in an effort to address trade imbalances and achieve supply chain diversification, particularly in light of China’s increased export restrictions on rare earth minerals.
President Trump signed reciprocal trade agreements with Malaysia and Cambodia, as well as a framework agreement with Thailand. According to a joint statement released by the White House, the U.S. will maintain tariffs at 19% for these three countries, but some tariffs on certain goods will be reduced to zero.
The U.S. also announced a similar framework agreement with Vietnam. With Vietnam having a trade surplus of $123 billion with the U.S. last year, the country has pledged to significantly increase its purchases of American products to narrow the trade gap between the two nations.
During his visit, President Trump signed two agreements with Thailand and Malaysia separately, aiming to enhance cooperation with both countries to diversify critical mineral supply chains. This move is intended to counter China’s global control over key mineral supplies such as rare earths.
According to a Reuters report earlier this month, China is also in negotiations with Malaysia regarding rare earth processing.
As the world’s largest producer and processor of rare earths, China’s strict control over refining technology and export of rare earth products has led to a scramble among global manufacturers to seek alternative sources for these critical minerals.
These critical minerals are widely used in semiconductor chips, electric vehicles, and military equipment, making them strategically important. On October 9th, China announced an expansion of export controls on rare earth products, provoking President Trump. As the U.S. seeks to counter China, it is also strengthening diversification of its rare earth supply chain to reduce dependence on Chinese rare earths. For Trump, enhancing cooperation with Malaysia and Thailand on critical minerals is of significant importance.
According to a statement released by Malaysia and the U.S., Malaysia agreed on Sunday not to impose bans or quotas on the export of critical minerals or rare earth elements to the U.S.
With approximately 16.1 million tons of rare earth reserves, Malaysia has banned the export of raw rare earth materials to prevent resource depletion while seeking to develop downstream industries.
Regarding the memorandum of understanding signed between the U.S. and Thailand on critical minerals, both countries will enhance cooperation in the development and expansion of critical mineral supply chains, promoting trade and investment between the U.S. and Thailand in exploration, extraction, processing, refining, recycling, and reuse of critical mineral resources.
The agreements signed separately with Malaysia, Cambodia, Thailand, and Vietnam commit these four Southeast Asian countries to eliminating trade barriers and providing preferential market access for a variety of U.S. goods.
These agreements also include commitments in digital trade, services, and investment, as well as commitments from these Southeast Asian countries to protect labor rights and enhance environmental protection.
Malaysia has agreed to streamline requirements for U.S. products such as cosmetics and pharmaceuticals. Malaysian Trade Minister Tengku Zafrul Aziz told reporters that the country has received tariff exemptions for U.S. aerospace equipment and pharmaceuticals, as well as bulk commodities such as palm oil, cocoa, and rubber.
Thailand has committed to eliminating tariff barriers for around 99% of U.S. goods and relaxing foreign ownership restrictions on U.S. investments in the telecommunications sector in Thailand.
The statement also notes various agreements between the U.S. and Thailand in agriculture, energy, and aviation sectors that are expected to be reached, with Thailand committing to purchase 80 American aircraft totaling $18.8 billion.
(The article referenced reports from Reuters.)