The recent announcement by the United States to impose reciprocal tariffs on Thai imports at a steep 36% rate has sent ripples through Thailand's economy, posing significant challenges across multiple sectors. According to an extensive analysis by the SCB Economic Intelligence Center (EIC), this tariff is notably higher than those imposed on many of Thailand's key competitors in the ASEAN region and beyond, raising alarms about potential losses in market share, investment slowdowns, and broader economic repercussions.
On July 7, 2025, the White House officially notified 23 trading partners, including Thailand, about the reciprocal tariffs, delaying the enforcement date to August 1, 2025, from the original July 9 deadline. Thailand was among the first 14 countries to receive this notification, with the U.S. citing its significant trade surplus as a reason for the high tariff rate. The U.S. has indicated a willingness to reduce tariffs if countries submit improved negotiation proposals before the new deadline, but as of now, Thailand faces a 36% tariff—substantially higher than the ASEAN average of 28% (excluding Thailand) and the global average of 16%.
This tariff disparity is particularly concerning given that Vietnam, a major competitor, successfully negotiated its tariff down from 46% to 20% for domestically produced goods and 40% for transshipped items by early July. Meanwhile, other ASEAN countries such as Indonesia, Malaysia, the Philippines, and Singapore face lower rates ranging from 10% to 32%. SCB EIC warns that these differences could erode Thailand's competitive edge in the U.S. market, especially for critical sectors like electronics and electrical appliances.
Thailand's electronics exports, including mobile phone and computer parts, risk losing ground to rivals like Malaysia and the Philippines. Semiconductors, hard disk drives, and signal transmission equipment may be supplanted by products from China, Vietnam, and Mexico. Electrical appliances face intensified competition from South Korea and Japan, which are subject to lower 25% tariffs. Moreover, the rubber tire industry confronts a competitive disadvantage due to U.S. trade benefits extended to USMCA members Mexico and Canada, threatening Thailand's position as a leading supplier.
Processed seafood, particularly canned tuna, which currently accounts for nearly half of U.S. imports in this category from Thailand, could see its market share diminish due to higher tariffs compared to Vietnam. This shift could have lasting impacts on Thailand's export profile and its economic vitality.
Another layer of complexity arises from the U.S. targeting goods with high import content or suspected transshipment practices, as seen in Vietnam's case where some products face tariffs as high as 40%, despite negotiated reductions. SCB EIC anticipates similar measures could affect Thai industries heavily reliant on imported components, such as electrical circuits, electronic parts, solar cells, automotive parts, aluminum, and electrical appliances, further increasing trade costs and complicating supply chains.
On the domestic front, the prospect of opening Thailand's markets to U.S. agricultural and industrial products without conditions is fraught with risks. The agriculture and livestock sectors, particularly pork, chicken meat, and corn, are highly vulnerable due to Thailand's higher production costs—27% higher for pork and chicken, and 9% higher for corn compared to the U.S., including shipping. Thailand largely depends on domestic production, with only 22% of corn consumed being imported and no imports of pork or chicken meat. Opening these markets could lead to a surge in cheaper U.S. imports, lowering prices for consumers and animal feed producers but threatening food security and the livelihoods of small-scale farmers who dominate the sector.
For instance, the U.S. has long pressured Thailand to open its pork market, citing issues like the ban on imports due to ractopamine use. Past resistance led to the suspension of preferential trade benefits under the Generalized System of Preferences (GSP) for numerous Thai products in 2020. Should Thailand concede to unrestricted market access, the resulting price drops could severely reduce farmers' incomes and force many to cease production, with cascading effects on related supply chains.
The beef sector presents moderate vulnerability since Thailand already imports beef under free trade agreements with countries like Australia and New Zealand, but increased U.S. competition could intensify pressures, especially on premium-grade beef producers. Conversely, commodities like soybeans, natural gas, and dairy products, which Thailand imports extensively, are expected to face limited impact.
SCB EIC stresses the importance of the Thai government carefully weighing the benefits of tariff reductions against the potential harm to domestic industries. They recommend conditional market openings rather than blanket liberalization, coupled with support measures such as short-term liquidity assistance, market diversification efforts, and initiatives to boost domestic producers’ competitiveness through innovation, improved standards, and alignment with evolving international trade regulations.
From an economic outlook perspective, the tariff imposition is anticipated to dampen Thailand's export growth in the latter half of 2025, with exports potentially contracting by the end of the third quarter and continuing into the fourth. This decline is partly attributed to front-loaded shipments ahead of tariff enforcement and the higher tariffs Thailand faces relative to competitors. Private investment is also expected to slow as foreign investors adopt a cautious stance pending clearer trade negotiation outcomes, with some investment potentially diverted to countries like Vietnam that have secured more favorable tariff terms.
Consumer spending is forecasted to weaken, especially in the fourth quarter, as job losses loom from reduced export activity, further dampening domestic demand. The Bank of Thailand (BoT) is likely to respond with monetary easing, with SCB EIC projecting two interest rate cuts in 2025 to mitigate economic slowdown risks, although more cuts may be necessary if tariff negotiations falter.
Meanwhile, the Port Authority of Thailand (PAT) is bracing for the tangible impacts of these tariffs on maritime trade volumes. Despite a record-breaking 2024 fiscal year with revenues reaching 17.2 billion baht and net profits of 7.6 billion baht, PAT expects that the 2025 figures may fall short of continuing this growth streak. The first half of fiscal 2025 saw increased port calls, cargo tonnage, and container throughput, driven by businesses accelerating shipments ahead of tariff enforcement. However, PAT anticipates that the full effects of the tariffs will become apparent by mid-August to September 2025.
Pat representatives express cautious optimism, noting no immediate signs of shipping companies withdrawing or diverting investments to neighboring countries. This is attributed to the long-term, capital-intensive nature of port infrastructure projects and the comparable tariff rates faced by neighboring ASEAN countries like Indonesia (32%) and Malaysia (25%).
Thailand’s trade negotiations with the U.S. are ongoing, with the government submitting a revised proposal on July 6, 2025, aiming to reduce the trade surplus by 70% within five years and achieve trade balance in seven to eight years. The proposal also includes opening the market to approximately 90% of U.S. agricultural and industrial goods at zero tariffs and reducing non-tariff barriers, alongside commitments to increase U.S. energy and aircraft purchases.
Ultimately, the trajectory of Thailand’s economy in the coming months hinges heavily on the success of these negotiations. A timely and favorable resolution could alleviate tariff burdens, support export competitiveness, and bolster investor confidence. Conversely, failure to reach an agreement risks deepening economic headwinds, necessitating concerted government support and strategic adaptation by Thai industries.
