Increasing Apprehension for Thai Industries Over Potential US Tariffs due to Connection Between Border Strife and Trade Expiry
In a significant development, Thailand has successfully negotiated a reduction in the US reciprocal tariff from 36% to 19%, effective August 6, 2025. This outcome came after Thailand submitted its final proposal in late July and responded actively to US demands regarding market access, customs procedures, false origin claims, and investment reciprocity.
The high tariffs, if they had remained, would have severely impacted Thailand's economy. Economists predict that the 36% tariff would have limited GDP growth to about 1.1% in 2025 and 0.4% in 2026, with potential losses of 800-900 billion baht. This is a stark contrast to other ASEAN countries like Vietnam (20%), Indonesia (19%), the Philippines (19%), and Malaysia (25%), all of whom have already secured lower tariff rates with the US.
Thailand was under pressure due to its lagging exports and the strong baht eroding competitiveness, making a tariff advantage critical. The 19% tariff rate Thailand obtained is broadly in line with these ASEAN competitors, allowing Thai businesses to remain competitive in the US market compared to a 36% tariff scenario, which would have been disproportionately punitive.
Achieving 19% rather than 36% provides significant relief to Thai exporters and helps mitigate potential economic slowdown. The reduced rate matches or is close to tariffs granted to major ASEAN competitors, helping Thai businesses maintain competitiveness that would otherwise be severely undermined by a 36% tariff.
However, Thanakorn Kasetsuwan, president of the Thai National Shippers Council, urged the Thai government to request a postponement of the tariff implementation period from the US. This request is based on the need for Thai businesses to prepare and adjust to the new tariff regime, ensuring a smooth transition and minimising disruptions to trade.
Regarding international relations, Thanakorn Kasetsuwan suggested that Thailand's defensive actions against Cambodia's initiation of conflict are legitimate and normal. He also warned that if fighting persists, leading the US to withdraw from tariff talks, Thailand would face the 36% duty, severely impacting exports.
The current status is that Thailand is no longer subject to the 36% tariff; it has been reduced to 19% after final negotiation rounds in July-August 2025. This negotiated tariff rate better aligns Thailand with the US's regional trade strategy and reflects Thailand's responsiveness and cooperation in addressing US trade demands.
References:
- Thailand, US reach deal to cut tariffs to 19%
- Thailand secures US tariff cut, but risks remain
- Thailand's US tariff cut: what it means for Thai businesses
- Thailand's US tariff cut: a victory for the Thai economy
Read also:
- Discusses Rasmus Sojmark's thoughts on the Legends Charity Game before SBC Summit
- Stone mining has transformed the once renowned 'Sada Pathor' into a desolate, post-apocalyptic landscape.
- In the Heart of Soho, Manhattan, a New Brewery Emerges Underground
- Financial regulatory body OCC imposes Anti-Money Laundering (AML) disciplinary action against Wells Fargo.
