In a significant shift in international trade dynamics, the United States has announced a series of new tariffs that will impact numerous countries, including Thailand and China. Effective April 9, 2025, the U.S. will impose a Reciprocal Tariff of 36% on Thai exports, a move that comes in response to ongoing trade imbalances. This decision follows President Donald Trump's executive order to levy tariffs aimed at correcting trade deficits with various nations.
Mr. Wuthikai Leeweerapan, the Director-General of the Department of Trade Negotiations under Thailand's Ministry of Commerce, explained that the U.S. tariffs are calculated based on the trade deficit with each country. The initial phase of this tariff implementation began on April 5, when a 10% tax was applied to all imported goods from every country. However, shipments already in transit prior to this date are exempt from the new rates until May 27, 2025.
"The Reciprocal Tariff will be applied specifically to Thailand at a rate of 36%, which is significantly higher than the average tariffs imposed on other nations," Mr. Leeweerapan stated. The measure is part of a broader strategy by the U.S. to reduce its trade deficit and bolster domestic industries by imposing higher tariffs on countries with which it has significant trade imbalances.
Notably, certain goods such as steel and aluminum have already been subjected to separate tariffs of 25%, and the reciprocal tariffs will not apply to other essential commodities like medicines and semiconductors for the time being. This decision reflects the U.S. administration's ongoing efforts to navigate complex trade relationships while attempting to maintain its economic interests.
In response to the U.S. tariffs, China has also announced reciprocal measures, imposing a 34% tariff on imports from Thailand effective May 10, 2025. This tit-for-tat approach highlights the escalating trade tensions and the potential for broader economic repercussions globally. Mr. Tu Xinquan, a trade expert from China, noted that such measures could severely disrupt global supply chains and lead to increased prices for consumers.
As the Thai government prepares for the economic fallout from these tariffs, it is actively seeking to mitigate negative impacts on its exporters. The Ministry of Commerce has instructed relevant agencies to explore new market opportunities and reduce dependency on the U.S. and Chinese markets. This includes targeting high-potential markets such as the Middle East, Latin America, and Africa.
Dr. Yanyong Thaijaroen, head of the Economic Intelligence Center at SCB, emphasized that the new tariffs could significantly hamper the Thai economy, particularly as exports to the U.S. account for approximately 18% of Thailand's total exports. He highlighted that sectors such as electronics, rubber products, and automotive components are likely to be the hardest hit.
"Eight out of ten of Thailand's major export products to the U.S. will face increased tariffs, which could lead to a substantial decline in export volumes," Dr. Thaijaroen warned. He added that the economic outlook for Thailand could be downgraded significantly if these tariffs remain in place.
On the domestic front, the Thai stock market reacted negatively to the announcement, with a drop of 50 points on April 8, 2025, reflecting investor concerns over the potential economic repercussions of the new trade policies. Economists have urged the government to engage in proactive measures to address the looming challenges posed by these tariffs.
"Negotiating with the U.S. for tariff reductions is crucial, and we must also focus on diversifying our export markets to reduce reliance on traditional partners," suggested Mr. K. Prachumtidto, a stock market analyst.
Moreover, the Thai government is reportedly preparing measures to support local businesses affected by the tariffs. This includes potential financial aid and incentives for companies to explore alternative markets. The emphasis on expanding Free Trade Agreements (FTAs) with emerging economies is also part of the strategy to cushion the impact of U.S. tariffs.
As the situation develops, the Thai government is closely monitoring the global trade landscape and is committed to ensuring that Thai exporters remain competitive in the face of increasing tariffs. The ongoing negotiations with the U.S. and other trading partners will be critical in shaping the future of Thailand's trade relationships.
In summary, the implementation of Reciprocal Tariffs by the U.S. marks a turning point in international trade relations, with Thailand and China poised to face significant challenges. The Thai government's response will be crucial in navigating this complex environment and ensuring economic stability moving forward.
