Thailand Intensively Negotiates to "Ease" Tariffs
Thailand's Finance Minister Pichai Chunhavajira said on Tuesday in an interview with Thailand's Channel 3 TV that the Thai government is actively communicating with the United States regarding new trade proposals. Their goal is to significantly reduce the proposed high tariff rate of 36% to be imposed on Thailand before U.S. President Trump's announced tariff policy officially takes effect, to protect export industries and overall economic stability.
Aim to Complete Agreement Framework by August
Trump previously announced that starting August 1, punitive tariffs ranging from 25% to 40% will be imposed on several trading partners, including Thailand, which faces a proposed tariff of 36%. This covers major Thai export categories such as apparel, auto parts, processed foods, and rubber products.
Pichai revealed that Thailand hopes to reach a memorandum of understanding or temporary agreement with the U.S. before August to mitigate the potential impact of high tariffs on Thailand's export and investment environment. He emphasized, "We will do our utmost to ensure that the negotiation results allow Thai businesses to remain competitive in the future while protecting domestic employment."
High Tariffs May Affect Thailand's Export Competitiveness
Thailand's economy is highly dependent on exports, with total exports in 2024 accounting for nearly 60% of GDP. The U.S. is Thailand's third-largest export market, with bilateral trade exceeding $60 billion last year. If the 36% tariff is implemented, it is expected to affect major export industries such as agriculture, electronics, and rubber, weakening competitiveness against regional rivals like Vietnam and Malaysia in the U.S. market.
According to data from Thailand's Ministry of Commerce, just the automotive and parts industry could experience a decline in export value of over 15% if subjected to a 36% tariff, directly threatening manufacturing and related jobs.
Simultaneous Internal Discussions and Regional Collaboration
In response to this round of trade pressure, the Thai government has recently held multiple joint meetings with the Ministries of Finance, Commerce, and Industry to assess the potential impact on various industries, and has coordinated with the Thai Exporters Council and major industry associations to prepare contingency plans.
Additionally, Thailand is maintaining close communication with other ASEAN member countries to seek collaboration within the regional framework to counter the risk of escalating U.S. tariffs and to jointly maintain stable market shares for Southeast Asian export-driven economies in the U.S. market.
Market Focuses on Negotiation Progress and Potential Impacts
Market analysts believe that if Thailand and the U.S. can reach a phased agreement before August, it will significantly boost the Thai baht's exchange rate and the share prices of related export companies, alleviating investor concerns about declining exports and expanding trade deficits.
Meanwhile, the Bank of Thailand and the Ministry of Finance both state that they will closely monitor negotiation progress and the impact of global trade conditions on capital flows and inflation, and will adjust policies if necessary to stabilize the economic fundamentals.
