Thailand is making last-ditch efforts to avert a 36% tariff imposition by the Trump administration, including proposing greater market access for American agricultural and industrial goods, as well as additional purchases of energy and Boeing aircraft.
In an interview with Bloomberg News on July 6th, Thai Finance Minister Pichai Chunhavajira stated that Bangkok’s latest proposals to the US aim to boost bilateral trade and reduce Thailand’s $46 billion trade surplus with the US by 70% over five years, moving towards a balance between the two countries in 7-8 years. This timeline is faster than the previous offer by Thailand, which proposed eliminating the trade surplus within a decade.
Pichai is expected to present Thailand’s new proposals to the US before July 9th, the deadline for the end of the 90-day exemption from higher countervailing duties. The Minister stated that if the new proposals are accepted by the US, Thailand could immediately waive import duties or non-tariff barriers for most US products while gradually removing restrictions on a smaller group of goods.
Thailand’s new proposals follow Pichai’s meeting last Thursday with US Trade Representative Jamieson Greer and Deputy Treasury Secretary Michael Faulkender. This was the first ministerial-level tariff negotiation between the two countries. Pichai stated that while more American products will have greater access to the Thai market, most of them are currently in short supply locally, so increased imports will have minimal impact on local farmers or producers.
“What we are proposing to them will benefit both sides. They can trade more with us, and we have the opportunity to streamline our processes and cut red tape,” Pichai told Bloomberg.
Thailand is one of several countries racing against time to finalize deals with the US and avoid higher tariffs. Failure to secure lower tariffs in its largest export market could result in a significant drop in Thailand’s exports and shave off up to a percentage point from the country’s economic growth forecast.
Minister Pichai stated that Thailand is aiming for a preferable tariff rate of 10% and added that even a rate between 10-20% would be acceptable. “The worst-case scenario is that Thailand gets the worst deal compared to its regional neighbors,” he said.
Pichai also mentioned that Thailand has made “aggressive” adjustments to its plans to purchase American energy, particularly liquefied natural gas (LNG), and Boeing aircraft. These additional purchases are expected to significantly reduce the trade imbalance between the two countries.
Thai petrochemical companies, including SCG Chemicals Pcl and PTT Global Chemical Pcl, have committed to importing more American ethane. PTT Pcl indicated that it could purchase two million tons of LNG annually for 20 years from the Alaska gas project, while state-controlled Thai companies are exploring interests in participating in its development. The national carrier, Thai Airways, has signaled it could purchase up to 80 Boeing aircraft in the coming years.
Securing lower tariffs from the US is seen as key to shielding Thailand’s trade-dependent economy from deeper slowdown risks. The country’s economic growth is currently facing headwinds from the highest household debt levels in Southeast Asia and sluggish domestic consumption. A favorable trade deal would also ease investor concerns stemming from political instability following the court-ordered suspension of Prime Minister Paetongtarn Shinawatra over border dispute charges with Cambodia.
Thailand’s exports have increased by about 15% in the first five months of the year, largely due to accelerated orders during the 90-day tariff suspension period.
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