Thailand encounters a rise in taxes following USA's postponement of trade accord, while disputes at borders influence diplomatic relations.
In the ongoing regional tensions, the Thai National Shippers' Council's president, Thanakorn Kasetsuwan, has called on the Thai government to request a delay in the US reciprocal tariffs, as the border conflict with Cambodia continues to pose a significant challenge.
The current status of the US-Thailand trade deal is as follows:
- Background: The US-Thailand trade negotiations were initially delayed due to the ongoing border tensions between Thailand and Cambodia. The US had threatened to impose a 36% tariff on Thai goods if the border conflict was not resolved by August 1, 2025[1].
- Recent Developments: Despite these challenges, Thailand announced on August 1, 2025, that it had successfully negotiated a preliminary agreement on reciprocal import tariffs with the US. The agreement states that imports from Thailand to the US will be subject to a 19% tariff rate, rather than the initial 36% rate[2]. However, further negotiations are required to finalize the terms.
- Ceasefire Efforts: The ASEAN Chair, Malaysia, facilitated a meeting between Thailand and Cambodia to negotiate a ceasefire, which is seen as crucial for resolving the border conflict and creating a stable environment for trade negotiations[1].
- Impact of Tariffs: If the preliminary agreement does not become legally binding, or if the conflict escalates, the imposition of a higher tariff could significantly affect Thailand's exports, which include items like furniture, electronics, and machinery[1]. Additionally, there is concern about potential trade retaliation if Chinese exports are channelled through Thailand[1].
Poj Aramwatananont, Chairman of the Thai Chamber of Commerce, highlighted the potential benefits of the US ceasefire initiative, noting it could help prevent further loss of life and economic damage. The Chairman of the Federation of Thai Industries, Kriangkrai Theeranukul, emphasized that if the US and Thailand fail to reach a resolution by July 31, US tariffs will apply at 36% across all Thai exports, putting Thailand at a competitive disadvantage compared to regional neighbours.
Key Thai industries, particularly those with the US as a major trading partner, such as processed food, agriculture, automotive parts, electronics, textiles, jewellery, and steel, could be severely affected by the tariffs. The impact of the US tariffs on Thai exports could range between 800 to 900 billion baht.
The Thai government has submitted a second proposal to the US, differing from the initial offer, particularly in the number of product lines that could benefit from a 0% tariff. Thai Deputy Prime Minister and Finance Minister Pichai Chunhavajira expressed hope for a fair tax rate, ideally on par with ASEAN countries. There has been no response from the US yet on the second proposal, though Kriangkrai remains hopeful for a favorable resolution before the deadline.
As the situation remains fluid, the Thai government faces economic uncertainty due to the delay in finalizing trade talks with the US, caused by ongoing border tensions with Cambodia. All goods arriving at US ports from August 1 onward will be subject to the 36% tariff if the US and Thailand fail to reach an agreement by July 31.
- The ongoing border tensions between Thailand and Cambodia have significantly impacted the business environment, as the Thai National Shippers' Council's president has called for a delay in the US reciprocal tariffs.
- Poj Aramwatananont, Chairman of the Thai Chamber of Commerce, believes that the US ceasefire initiative could help prevent further economic damage and loss of life.
- The US-Thailand trade deal has witnessed recent developments, with Thailand successfully negotiating a preliminary agreement on reciprocal import tariffs, though further negotiations are necessary to finalize the terms.
- The finance and economy sectors are closely monitoring the progress of the US-Thailand trade negotiations, as a higher tariff could significantly affect Thailand's exports, potentially amounting to 800 to 900 billion baht.
- General news outlets are reporting on the political implications of the US-Thailand trade deal, as the outcome could influence the country's competitive standing in the regional economy, particularly in key industries like processed food, agriculture, automotive parts, electronics, textiles, jewellery, and steel.
