Trump pauses tariff hikes for 90 days, easing pressure on global markets, but Thailand risks falling behind Vietnam in talks with Washington. With GDP forecast to shrink by 0.7% and no trade deal yet, concerns grow over economic fallout and diplomatic strains.
Thailand’s stock market and government officials were relieved on Thursday after late-night news filtered through from Washington DC. President Trump paused the higher level of the Reciprocal Tariff regime for 90 days. However, there are mounting concerns for Thailand. First of all, the country has not yet had substantive talks with US officials. In the meantime, even the lower 10% tariff rate, which went into effect last Saturday, will shave 0.7% off GDP growth. In the meantime, Vietnam appears to be moving faster and has already spoken to President Trump while engaging in a meeting on Wednesday with US Trade Representative Jamieson Greer in Washington. Thailand’s core economic export sector is pushing for a trade deal. At the same time, the controversy over the prosecution of a respected US academic may also sour talks between the US and Thailand, coming just weeks after trust was breached over the deportation of Uyghur Muslims to China.
The Thai government breathed a sigh of relief in Bangkok late on Wednesday night, or more accurately, in the early hours of Thursday morning, when news of US President Donald Trump’s pause on higher tariffs came through from Washington, D.C.
In short, the US President, responding to both stock market fears but more significantly higher bond yields, made the call.
Trump’s late-night tariff pause follows bond market jitters and social media reassurance to investors
Indeed, the US Commander in Chief had previously hinted at it at 9:33 am in a social media post. “BE COOL,” it read. “THIS IS A GREAT TIME TO BUY.” Afterwards, he wrote, “Everything is going to work out well.”
In turn, he huddled with US Secretary of Commerce Howards Lutnick and Treasury Secretary Scott Bessent. After that, the announcement came at 1:18 pm Washington time, just 18 minutes after midnight in Bangkok.
“People were jumping a little bit out of line, they were getting yippy, a little bit afraid,” President Trump explained afterwards. In the meantime, his Press Secretary Karoline Leavitt reminded the press at the White House to read Trump’s 1980s bestseller ‘The Art of the Deal’.
Significantly, Trump did not lower all the Reciprocal Tariffs, keeping the baseline 10% intact. This had gone into effect on Saturday. Meanwhile, the high tariffs, such as 36% on Thailand, came into play just over 13 hours before the President’s call.
On Thursday morning, Deputy Managing Director and Secretary of Bangkok Bank and former Prime Minister’s Office minister Kobsak Pootrakool gave a short summary of developments.
Markets surge after tariff rollback announcement with 75 countries gaining temporary reprieve window
Firstly, the stock markets roared back. The Dow Jones gained 7.87%, its best since 2020. The NASDAQ gained a massive 12.16%, its best since 2001.
According to Pootrakool, who also posted a personal commentary online, the first round of negotiations helped by the bell resulted in a 90-day return to the 10% tariff rate for 75 countries willing to negotiate.
He noted the US markets responded strongly: Bitcoin rose nearly 10%, and volatility indexes like the VIX dropped sharply from highs above 57 to near 33. Certainly that indicated reduced stress in financial markets.
Afterwards, Trump himself admitted that it was the upending of the bond markets that unnerved him. With yields going over 4%, the danger was palpably clear. Afterwards, he fell back dramatically.
At the same time, his top aides such as Treasury Secretary Scott Bessent reminded the public that it took guts to play the game like this. At the end of the day, 75 countries were not ready to negotiate while a 10% Reciprocal tariff had already been applied.
Furthermore, the steel and aluminum 25% tariff remains as do the 25% and 10% regimes imposed on Canada and Mexico. Notably, these tariffs only apply to areas not covered by the North American trade pact.
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However, a telling development was that Trump simultaneously imposed a 125% tariff on China. This was an extra 21 points to add to the 104% rate already in place. Certainly, this means that the United States and America are now embroiled in a blazing and uncontrolled trade war.
Dr. Pootrakool noted in his analysis that China’s retaliatory moves have contributed to the rising figures. In short, bringing the total to 125% in what he described as the fifth round of escalation.
China’s refusal to yield, while others came forward to negotiate, has cemented its position. Indeed it has become the central opponent in Trump’s aggressive trade stance. In essence, this is a geopolitical struggle between China and the United States.
In addition, this has implications for ASEAN countries, most particularly Thailand. A key concession being offered to the United States by countries such as Thailand and Vietnam is a block on fraudulent exports. Undoubtedly, nearly all of these shipments are from China or linked with its world trade.
Thai trade delegation prepares to offer concessions as 90-day window opens for recalibration efforts
On Thursday, Deputy Prime Minister Pichai Chunhavajira confirmed he was still travelling to the United States as the Thai standard bearer. He said the pause would afford Thailand more time.
However, he repeated that Thailand’s goal would be to reduce trade imbalances. That would include more energy and oil purchases from America in addition to aircraft and agricultural products.
At the same time, Thailand would reduce its import taxes and crack down on the false certification of goods as originating in Thailand when coming from China.
Pichai said Thailand was preparing additional stimulus measures aimed at preserving jobs and production, given the expected loss in exports.
He also cited the 90-day pause as a key opportunity to recalibrate. Nevertheless, he has previously warned that failure to address the imbalance could shave as much as one percentage point from Thailand’s GDP this year.
US academic’s detention and Uyghur deportation scandal risk derailing diplomatic goodwill and trade trust
Later, Prime Minister Paetongtarn Shinawatra was accosted by reporters at Government House. Certainly, they asked her if the imprisonment and prosecution of Paul Chambers, a respected US academic, would be problematic to the trade talks.
Notably, Mr. Chambers was finally granted bail by a higher court in Thailand on Wednesday evening, which came with a surety of ฿300,000. However, all indications suggest that US officials are less than pleased with what has happened.
In particular, coming after the Uyghur deportations scandal. In this case, the United States felt it was misled by Thailand. Undoubtedly, these two issues will impact the relationship between the two countries.
At the same time, the Prime Minister neatly deflected questions by asking the reporters about Songkran. She did say that she knew President Trump would negotiate fairly.
Vietnam makes fast diplomatic gains while Thailand is yet to begin substantive talks on tariff reductions
However, it already looks like Thailand may be losing out in terms of urgency and speed to Vietnam. Admittedly, Vietnam has a larger trade deficit, but we have already had a meeting with US Trade Representative Jamieson Greer.
This was with Deputy Prime Minister Ho Duc Phoc while visiting Washington. The deputy PM has been appointed by Vietnam’s leader To Lam to lead talks with the United States.
Previously, President Trump hosted a telephone call with To Lam over the weekend. Afterwards, we were told that Vietnam had asked for a 45-day pause on the massive 46% tariff rate. They now have 90 days.
Meanwhile, Vietnam is talking about a free trade deal, including lower tariffs on US trade in addition to a more receptive investment climate.
According to an official statement released Thursday, both sides agreed to begin immediate discussions toward a reciprocal trade agreement. This includes tariff reductions and broader bilateral commitments to strengthen economic ties.
Analysts warn Thailand faces export losses as US talks wait and Vietnamese trade diplomacy surges ahead
Phoc also met with senators and US business leaders, highlighting Vietnam’s willingness to address Washington’s concerns, including curbing the rerouting of Chinese exports.
Certainly, Thailand has not engaged yet in any substantive talks. Prime Minister Paetongtarn on Thursday would only say the kingdom was preparing and doing its homework. She said that the US had acknowledged Thailand as seeking talks. Nonetheless, no appointment was yet made.
In the meantime, analysts are suggesting that even with the baseline 10% tariff rate still in effect, Thailand already stands to lose 0.7% of its GDP this year.
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In short, losing exports to the United States. Meanwhile, the country faces additional impacts from cheaper Chinese dumping and a slowdown in global demand.
Later, Trump boasted that he believed China would eventually also come to the table.
“We’ll get a phone call at some point, and it’ll be off to the races,” the US President said. “It’ll be a great thing for them. It’ll be a great thing for us. It’s going to be a great thing for the world and for humanity.”
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Further reading:
PM addresses the nation in shock over last week’s earthquake and this week’s Trump tariff bombshell
Finance Minister to travel to US to import more US food and motorbikes while lowering Thai tariffs
Trump’s trade war coming down hard on Thailand despite reports of talk. Reciprocal tariffs days away
Trump Presidency already having a heavy impact on Thailand even before he talks trade with Bangkok
Trump Presidency already having a heavy impact on Thailand even before he talks trade with Bangkok
