Deadline for US Tariffs approaches, uncertainly hangs over Thailand's export prospects
As the July 9 deadline approaches, Thailand's economy is on the brink of significant impact due to the approaching US import tariffs. The current 90-day suspension of a 36% US countervailing tariff on Thai exports is set to expire, with no final agreement yet reached.
Thailand's Deputy Prime Minister and Finance Minister, Pichai Chunhavajira, has been leading negotiations in Washington D.C. to secure a favorable deal. Pichai has confirmed that "Team Thailand" held extensive meetings with various US government policy-makers, private sector investors, and representatives from the US agricultural sector.
The government has full confidence in its potential to achieve a reduced import tariff rate from the original 36% to 10%. Deputy Finance Minister Julapun Amornvivat made this statement, with Thailand projecting that it could face an 18% US tariff, according to Danucha Pichayanan, Secretary-General of the National Economic and Social Development Council (NESDC).
Negotiations are reported to be progressing with positive signals from the US side, though the US has yet to make a final tariff rate decision. Thailand hopes for either an extension of the tariff suspension or a tariff reduction agreement, but with the July 9 deadline imminent, there is growing concern that no deal will be finalized in time.
The economic impact on Thailand is significant. The imposition of the 36% tariff would affect key export sectors such as autos and electronics, which account for about 40% of exports to the US. Many Thai exports to the US, such as computers, apparel, electrical appliances, and processed foods, are similar to those from Vietnam. If Thailand's tariff rate were to exceed Vietnam's 20%, the full economic impact would require a broader assessment, according to Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries (FTI).
Thailand's GDP growth forecasts may be impacted if the high tariff remains. Current estimates suggest Thailand could see 2.3% GDP growth if tariffs stay at 36%, but this outlook could worsen relative to neighbors with lower tariffs. The government and business leaders are urging that Thailand's tariff rate not exceed those of regional competitors to maintain its trade competitiveness and economic stability.
In anticipation of potential impacts, the government has mechanisms in place to assist affected businesses, with approximately 10 billion Baht earmarked from a 157 billion Baht budget. The Thai team will now take all this feedback to refine their technical-level proposals for a swift submission to the US.
Despite some hope for a tariff rate similar to Vietnam's, many question whether the remaining few days are enough to turn the tide before Trump's July 9 deadline. Businesses are closely watching whether Thailand will be named in the first batch of tariff letters, expected to be announced from Monday onwards. As of now, a conclusive agreement with the US remains elusive.
- The Deputy Prime Minister and Finance Minister of Thailand, Pichai Chunhavajira, is actively involved in negotiations regarding Thai imports tariffs with the US, trying to secure a reduced tariff rate from the current 36% to 10%.
- Despite positive signs from the US side, the government and businesses are deeply concerned that no agreement will be finalized before the looming July 9 deadline, potentially leading to negative effects on Thailand's economy and trade competitiveness.
- If Thailand's tariff rate were to exceed Vietnam's 20%, it would significantly worsen Thailand's economic growth prospects and require a broader assessment, according to Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries. The government has already allocated approximately 10 billion Baht to assist businesses potentially affected by these tariffs.
