Thailand to offer US more trade concessions to avert 36% tariff
The nation aims to lift bilateral trade and cut US$46 billion surplus with the US by 70% within five years, targeting balance in seven to eight years
[BANGKOK] Thailand is making a last-ditch effort to avert a punitive 36 per cent export levy threatened by the Trump administration with offers of greater market access for US farm and industrial goods, along with increased purchases of energy and Boeing jets.
Bangkok’s latest proposal aims to boost bilateral trade volume and reduce Thailand’s US$46 billion trade surplus with the US by 70 per cent within five years, reaching balance in seven to eight years, Finance Minister Pichai Chunhavajira told Bloomberg News in an interview late on Sunday (Jul 6). That’s quicker than the pledge to wipe the gap in a decade under an earlier proposal submitted by Thailand.
Pichai expects to submit the revised offers before Jul 9 – the end of the 90-day tariff pause announced by President Donald Trump. If accepted, Thailand can immediately waive import tariffs or non-tariff barriers for a majority of the products, while phasing out restrictions more gradually for a smaller set of goods, he said.
The revisions followed Pichai’s meeting on Thursday with US Trade Representative Jamieson Greer and Deputy Secretary of Treasury Michael Faulkender in the first ministerial-level tariff talks. As many of the US products which will gain greater access into the Thai market are in short supply locally, they are unlikely to hurt local farmers or producers, Pichai said.
“What we’re offering them is a mutually beneficial proposal,” Pichai said. “The US can trade more with us and we get to the chance to clean up our process and cut red tapes.”
Thailand is one of several countries racing to finalise a deal with the US and avoid steep tariffs. Failure to secure a reduced tariff with its largest export market could result in a sharp decline in merchandise shipments and shave as much as one percentage point off Thailand’s projected economic growth.
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Neighbouring Vietnam secured a deal last last week, with Trump announcing a 20 per cent tariff on its exports and a 40 per cent rate on goods deemed to be transshipped.
Thailand is pushing for a best-case rate of 10 per cent, Pichai said, adding that even a range of between 10 per cent to 20 per cent would be acceptable. “The worst thing that can happen is we get the worst deal out of our regional neighbours.”
Thailand has also made more “aggressive” adjustments to plans for purchasing US energy – particularly liquefied natural gas – and Boeing aircraft, which are expected to significantly reduce the trade imbalance, Pichai said.
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Thai petrochemical companies including SCG Chemicals and PTT Global Chemical have pledged to import more US ethane. PTT has said it could buy two million tonnes of LNG from the Alaska gas project annually over a 20-year term, while state-controlled companies are exploring interests in co-developing the project. National flag carrier Thai Airways has indicated it could buy as many as 80 Boeing jets in the coming years.
Securing a lower US tariff rate is seen as key to insulating Thailand’s trade-dependent economy from further downside. Growth is already under pressure from South-east Asia’s highest household debt and sluggish domestic consumption. A favourable deal would also help 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 have surged about 15 per cent in the first five months of the year, driven largely by front-loaded orders during the 90-day pause on proposed high tariffs. BLOOMBERG
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