Thailand to cut tariffs on 90% of US goods to avoid Trump trade levy

Business Standard

17-07-2025

Thailand is set to offer scrapping tariffs on 90 per cent of US goods, up from a previous plan for over 60 per cent, in a bid to avert a punishing levy threatened by President Donald Trump, according to a business group advising Thai negotiators.
Bangkok's third proposal would potentially eliminate tariffs and non-tariff barriers on about 10,000 US products, Chanintr Chalisarapong, vice chairman of the Thai Chamber of Commerce, told Bloomberg News in an interview Thursday.
He added that he expects the final tariff on Thailand will be set in a range of 18 per cent to 20 per cent — down from Trump's most recent threatened level of 36 per cent.
The new proposal, which will be presented to Washington in a conference call Thursday, could reduce Thailand's $46 billion trade surplus with the US by 70 per cent within three years and lead to balanced trade within five years, according to Chanintr. The new figures are even more ambitious than Thailand's July 6 offer to cut tariffs on over 60 per cent of products and eliminate the trade gap in seven or eight years.
'I expect our proposal to be solid and practical. The numbers should be satisfactory to the US,' said Chanintr, who's consulted with negotiators led by Finance Minister Pichai Chunhavajira over the past week to finalize details.
'What we'll be offering is potentially more than Indonesia and Vietnam,' he said. 'Since we're a manufacturing country, we have potential to use a lot more US goods and process them into products that we can export.'
Thailand is one of the Southeast Asian countries racing to finalize terms with the US. Failure to secure a reduced tariff with its largest export market, which accounted for about 18 per cent of Thailand's total shipments last year, could result in a sharp decline in merchandise shipments and shave as much as one percentage point off its projected export-driven economic growth.
Trump has announced deals for 20 per cent tariffs on Vietnamese goods and 19 per cent for Indonesia, though transshipments through both countries would face higher levies.
Bangkok rushed to sweeten its proposal after Trump announced last week that the 36 per cent tariff level on Thailand would start Aug. 1. Pichai, who had submitted a second proposal by then, said he was shocked and had been expecting a lower number.
Thailand's new proposal may include a tax exemption for US digital services that operate in Thailand or serve Thai customers, Chanintr said. It may also pledge more imports of liquefied natural gas, Boeing Co. planes, and key US food and agricultural products. The latter could include corn, soybeans and barley, which are important to Trump voters in rural states, he added.
Cheap US food and farm products are expected to help cut costs for the Thai pet food industry, which exports heavily to other countries. Lower costs for Thailand's animal feed industry will also likely boost productivity for the domestic poultry, livestock, and food-processing industries down the value chain, Chanintr said.
Pichai, who has said he was pushing for a best-case rate of 10 per cent, is expected to hold more talks with US Trade Representative Jamieson Greer. In their meeting in Washington earlier this month, Pichai agreed to cut import taxes for US products that are in short supply in Thailand and tighten rules to prevent transshipments.
'We'd like for talks to conclude soon so that trade can continue. There's been too much uncertainty,' Chanintr said, adding he is confident Thailand can secure a deal before Aug. 1. 'We're so close to the finish line.'
Thai growth is already under pressure from Southeast Asia's highest household debt and sluggish domestic consumption. A favorable deal would also ease investor concerns stoked by political turmoil following the court-ordered suspension of Prime Minister Paetongtarn Shinawatra over alleged ethical misconduct in handling a border dispute with Cambodia.
Thailand's exports rose about 15 per cent in the first five months of the year, driven largely by frontloading during the 90-day pause to allow tariff talks.
'This is a global trade war, not a bilateral one,' Chanintr said. 'Don't forget how high the stakes are.'