NAIROBI, KENYA – A new, contentious trade agreement signed between Malaysia and the United States last week has ignited a fierce debate in the Southeast Asian nation over economic sovereignty, while providing a critical case study for countries like Kenya currently navigating their own trade relationships with Washington. The deal, finalised during a visit by former US President Donald Trump, has been lauded by the Malaysian government as a strategic win but condemned by critics as a lopsided pact that cedes too much control to a global superpower.

For Kenya, whose trade relationship with the US is anchored by the soon-to-expire African Growth and Opportunity Act (AGOA) and the ongoing Strategic Trade and Investment Partnership (STIP) negotiations, the developments in Malaysia offer a cautionary tale. The terms of the Malaysia deal—whereby Kuala Lumpur will reduce or eliminate tariffs on certain American goods while the US largely maintains a 19% tariff on Malaysian products—reflect the transactional, "America First" approach to trade that characterized the Trump administration. This model starkly contrasts with the duty-free access for most Kenyan goods that AGOA has provided for over two decades.

"Nairobi should be paying very close attention," said a senior trade analyst at the Nairobi-based Institute of Economic Affairs on Wednesday, November 5, 2025. "This Malaysia agreement could signal a new template for US bilateral deals with developing economies. If this is the future, it could mean tougher negotiations for STIP and a post-AGOA landscape where preferential terms are no longer a given."

A 'One-Sided' Agreement

The core of the controversy lies in clauses that critics, including Malaysia's longest-serving former Prime Minister Mahathir Mohamad, argue amount to "handing over" the country's independence. Mahathir, a noted trade nationalist and political rival of the current prime minister, Anwar Ibrahim, claimed the deal forces Malaysia to buy specific US goods, adhere to American digital regulations, and provide preferential access to its mineral resources.

Perhaps most alarmingly for observers, one provision reportedly requires Malaysia to align with the US on economic sanctions against third-party countries. Opposition politician Azmin Ali warned this could compel Malaysia to block imports from key partners like China, destroying its long-held foreign policy of neutrality. According to the Office of the U.S. Trade Representative, total goods and services trade with Malaysia was an estimated $86.5 billion in 2024, highlighting the significant economic stakes.

In defense of the pact, Malaysia's Investment, Trade and Industry Minister, Tengku Zafrul Aziz, described it as "the best possible outcome" given the current geopolitical climate. He argued that as a major trading nation engaging with the world's largest economy, Malaysia must face these realities to attract investment and secure market access. The US is Malaysia's third-largest trading partner and a primary source of foreign direct investment.

Implications for the US-Kenya Trade Corridor

The debate in Kuala Lumpur resonates deeply in Nairobi. Kenya's exports to the US, primarily apparel, reached $737.3 million in 2024, with the vast majority entering duty-free under AGOA. However, with AGOA set to expire in September 2025, Kenya has been urgently pursuing the STIP as a more permanent framework. The STIP, initiated by the Biden administration, focuses on non-tariff areas like anti-corruption, digital trade, and environmental standards, but does not currently address tariff barriers.

A shift in US policy towards the Malaysian model could reshape these negotiations entirely. A future pact might demand reciprocal tariff reductions from Kenya, potentially exposing nascent local industries to overwhelming competition from US imports. Furthermore, the inclusion of clauses on foreign policy alignment or other sovereignty-sensitive issues could present significant challenges for Kenyan negotiators.

The "America First" trade doctrine, first implemented during Trump's presidency, prioritizes the reduction of US trade deficits and the reshoring of manufacturing through aggressive bilateral negotiations and the use of tariffs as leverage. This approach often views multilateral agreements and non-reciprocal preference programs like AGOA with skepticism. As Kenyan officials push to finalize a deal, the Malaysian experience underscores the need for a clear-eyed strategy that balances the benefits of US market access with the imperative to protect national economic and political autonomy.

As the dust settles on the Malaysia-US deal, its long-term impacts will be closely monitored globally. For Kenya and other nations in East Africa, it serves as an urgent reminder that the landscape of international trade is shifting, requiring both adaptability and a steadfast defense of sovereign interests.