Thailand faces a looming economic challenge as the United States prepares to impose a hefty 36% import tax on Thai goods starting August 1, 2025. This retaliatory tariff, announced by the US government, threatens to severely disrupt Thailand's export sector and investment climate, with industry leaders warning of significant losses and urgent calls for strategic responses.
Mr. Tanakorn Ketsuwan, President of the Thai National Shippers' Council (TNSC), voiced deep concerns over the potential fallout. Speaking on July 8, 2025, he highlighted that if negotiations with the US fail to produce a favorable outcome, Thailand's exports in the second half of the year will inevitably decline. The 36% tariff, modeled after Vietnam's trade evaluation but substantially higher than Vietnam's 20% and Malaysia's 25% tariffs, places Thailand at a distinct competitive disadvantage. "The US is clear: Thailand must face equivalent tariffs to those it imposes on American goods," Mr. Tanakorn explained, emphasizing the retaliatory nature of the move.
He elaborated that the US perceives Thailand as having long benefited unfairly, particularly by opening its market more to China than to the US. This perception has fueled the US's decision to impose such steep tariffs. Thailand's initial proposals to the US, including a second submission featuring broader agricultural product import concessions to achieve 0% tariffs on certain items, have yet to receive a response. Negotiators are racing against time, with just three weeks left before the tariffs take effect, hoping the US will consider these new proposals to mitigate the impact.
However, the threat of the 36% tariff has already caused ripples in the market. Importers are likely to divert orders to neighboring countries like Vietnam and Malaysia, where tariffs are lower, undermining Thailand's export volumes. Mr. Tanakorn warned that this shift could also deter foreign investment, particularly from US and Chinese investors, who might reconsider or postpone plans to invest in Thailand due to the increased costs and market uncertainties.
Complementing these concerns, Mr. Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries (FTI), underscored the gravity of the situation on July 10, 2025. He forecasted that the US tariffs could slash Thailand's export earnings by 800 to 900 billion baht, a staggering blow to the economy. The sectors most vulnerable include processed foods, agricultural products, automotive and parts, electrical appliances, electronics, textiles, jewelry, steel, and aluminum—industries where the US is a major trading partner.
Mr. Kriengkrai noted that the announced 36% tariff rate exceeds prior private sector estimates and is notably higher than tariffs imposed on Thailand's regional competitors. This disparity starkly highlights Thailand's weakening competitive position. He pointed out that Thailand's first tariff reduction proposal was sent on July 6 and signed on July 7, potentially conflicting with the US's tariff announcement. Nevertheless, a second, more comprehensive proposal covering thousands of product categories with 0% tariff reductions has been submitted, though no feedback has been received yet.
In response to the escalating crisis, the FTI is mobilizing urgently. A meeting involving 47 industrial groups across 11 clusters is slated to assess the specific impacts on each sector and develop tailored countermeasures. Following this, the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) plans to convene with government officials and relevant agencies to coordinate a unified response strategy.
Meanwhile, the Thai National Shippers' Council is preparing detailed information to support dialogue with the government negotiation team, led by Deputy Prime Minister and Finance Minister Mr. Pichet Chunwachira. The council aims to explore ways to alleviate production costs, improve competitiveness, and expand into new markets. Proposed measures include managing exchange rates, adjusting interest rates, and allocating budgets to assist private sector market expansion efforts.
Despite the tense environment, there remains cautious optimism. Both Mr. Tanakorn and Mr. Kriengkrai expressed hope that the US will seriously consider Thailand's second round of proposals before the August 1 deadline, potentially leading to reduced tariff rates and less severe economic consequences. Yet, the clock is ticking, and the outcome of these negotiations will significantly influence Thailand's export trajectory and broader economic health in the months ahead.
In sum, the impending US tariffs represent a critical test for Thailand's trade diplomacy and industrial resilience. With billions of baht at stake and investor confidence wavering, Thai authorities and industry leaders are scrambling to find solutions that could preserve the country's export competitiveness and sustain its economic momentum amid this challenging trade dispute.
