Thailand confident of securing lower US tariff with trade offers
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The US was Thailand’s largest goods export market in 2024, accounting for about 18 per cent of the country’s total shipments.
PHOTO: REUTERS
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BANGKOK - Thailand remains optimistic about securing a lower tariff rate than the 36 per cent levy announced by President Donald Trump based on an offer to bring down import tax on most US goods to zero, according to Finance Minister Pichai Chunhavajira.
Mr Trump set the levy on Thailand without taking into account its revised proposals to increase market access by removing tariff and non-tariff barriers on a number of goods, Mr Pichai told reporters on July 8.
The South-east Asian nation expects to wrap up trade negotiations before the Aug 1 deadline set by Washington, he said.
In a last-minute bid to avoid the punitive tariff, Thailand had submitted a revised proposal to the US on July 6 to boost bilateral trade volume and reduce its US$46 billion (S$58.7 billion) trade surplus by 70 per cent within five years.
The offers included greater market access for US farm and industrial goods, as well as increased purchases of energy and Boeing jets.
The latest Thai proposal “is a good deal for the US and Thailand will lower import tariffs on 90 per cent of US products”, Mr Pichai said, adding that he was “a bit shocked” by the letter setting the tariff unchanged at 36 per cent.
Clinching a lower US tariff rate is key to insulating Thailand’s trade-dependent economy from further downside.
Growth is already under pressure from Southeast Asia’s highest household debt and sluggish domestic consumption.
Thai officials have estimated that tariff levels of 36 per cent could shave of at least one percentage point off gross domestic product this year.
Investors have also been concerned by political turmoil following the court-ordered suspension of Prime Minister Paetongtarn Shinawatra over alleged ethical misconduct in handling a border dispute with Cambodia.
Thai financial markets were mixed on Tuesday, with the baht gaining about 0.35 against the dollar and the benchmark stock index, declining 0.6 per cent to widen losses this year to 20 per cent.
Thailand’s economy might slide into a deep recession in the second half if it fails to negotiate down the US tariff, according to Mr Burin Adulwattana, managing director and chief economist of Kasikorn Research Centre.
Kasikorn plans to slash full-year growth estimate to around 1 per cent from 1.4 per cent, he said.
“We may start to see plant closures and job losses,” Mr Burin said.
“Next year will be even worse. It will be great short term pain for Thailand.”
The National Economic and Social Development Council, the statistics and planning agency, said it will review its gross domestic forecasts for the rest of the year in view of the tariff announcement. Even with a 36 per cent levy, some Thai products will still be competitive in the US, Secretary-General Danucha Pichayanan said.
The US was Thailand’s largest goods export market last year, accounting for about 18 per cent of the country’s total shipments.
The country’s exports have surged about 15 per cent in the first five months of the year, driven by front-loading of orders following a 90-day pause in high tariffs set by the Trump administration.
Mr Pichai defended the government approach on tariff talks, saying it was not slow to engage US in negotiations. The final tariff levels will be in line with the peers and competitive enough for Thai exporters, he said. BLOOMBERG
