Custom duties form a central part of a political contest
The US's decision to impose a 36% tariff on Thai exports, set to take effect on August 1, 2025, has sparked concern and prompted active negotiations between the two countries. The high tariff rate, much higher than the 20% faced by Vietnam, places Thailand at a significant competitive disadvantage in the US market.
The current tariff dispute centers on the US imposing the punitive tariff on Thai exports, a move that remains unchanged despite Thailand's efforts to negotiate a lower rate. The US tariff, affecting about 1.9% of US imports, has been met with a counteroffer from Thailand to significantly lower its import tariffs on 90% of US products. This move aims to reduce Thailand's $46 billion trade surplus by 70% over five years through increased market access for US agricultural and industrial goods, including energy and aircraft.
The high tariff is expected to heavily impact Thailand's export-dependent economy. The Bank of Thailand (BOT) has revised Thailand's 2025 GDP growth forecast down to 2.3%, with growth in the second half of 2025 possibly falling to 1.6%, and exports expected to shrink by 4% in late 2025 and 2% in 2026. The manufacturing and export sectors, which had driven growth earlier in 2025, will face a slowdown, leading to lower private sector investment and weaker domestic demand.
The Thai government, led by Finance Minister Pichai Chunhavajira, has expressed readiness to fulfill its trade offers, which include lowering import tariffs on US products. Thai business leaders have proposed that Thailand consider exempting US imports from duties, similar to a free trade agreement (FTA) approach, to defuse tensions and encourage a more balanced trade relationship. The government is working to finalize negotiations and hopes to resolve the dispute in a way that minimizes economic harm before the US tariff comes into force.
The ongoing negotiations are being closely monitored by both government and business communities. Mr Poj, chairman of the Thai Chamber of Commerce, has expressed concern that tariff negotiations with the US may not be resolved soon, potentially resulting in the US maintaining a 36% tariff on Thai goods. The government is preparing measures to cushion the impact on each product group from US President Donald Trump's tariffs.
As the negotiations continue ahead of the Aug 1 deadline, the assessment of the impact of US tariffs on exports in Thailand is more detailed this time, as the tariffs vary depending on the product type and its local content. The government is preparing solutions for possible outcomes, whether they are favorable or moderately favorable.
In conclusion, the US's enforcement of a 36% tariff on Thai exports poses a significant challenge to Thailand’s economy and export sectors. Ongoing negotiations and proposed trade concessions by Thailand aim to mitigate the negative impact. The government and business communities are actively seeking solutions, including tariff exemptions and trade liberalization measures, to sustain trade flows and economic growth.
- The ongoing negotiations between the US and Thailand, driven by politics, are a significant focus in both the general news and business sectors, with the outcome anticipated to have a profound impact on the US's import market and Thailand's export-dependent economy.
- The proposed trade concessions by Thailand, such as lowering import tariffs on US products and potentially exempting US imports from duties, are strategic moves in the business arena aimed at fostering a more balanced trade relationship with the US, thereby reducing the economic harm from the imposed tariffs.
