Trump’s 36% tariff on Thai imports stuns analysts, threatens $15bn in losses, and puts 2025 GDP growth at risk. PM Paetongtarn urges calm, promising swift negotiations and countermeasures to soften the blow as Thailand scrambles to respond.
Prime Minister Paetongtarn Shinawatra urged businesses, leaders, and the public not to panic on Thursday, following the bombshell announcement of a 36% tariff rate being imposed by the United States immediately on all imports. Certainly, the announcement was beyond even the most pessimistic predictions of analysts as late as Tuesday. In short, it means that Thailand stands to lose up to $15 billion per year even if it can ramp up its export volumes. This means that any hope of meaningful economic or GDP growth in 2025 may be dashed. The PM’s office spoke of her team having a ‘strong plan’ to deal with the crisis. Firstly, a negotiation strategy is being forged and secondly, efforts will be taken to mitigate the impact of the tariffs which are already in effect.
Thailand’s government, like others worldwide, was left stunned by US President Donald Trump’s sweeping and deep tariff reform announced on Tuesday, Washington DC time, at the White House Rose Garden. Certainly, the tariff rate for Thailand has shaken most analysts. Previously, on Monday, a Bangkok trading and investment house, Innovest X, had presented predictions.
In brief, they suggested that there was only a 10% chance of a tariff being imposed on Thailand exceeding 10%.
US tariff hike on Thai imports shocks analysts, exceeding worst-case predictions from earlier this week
However, the figure unveiled on Tuesday in the US was 36%. Basically, the American-developed formula was not just based on upfront tariffs but also on volume, type of exports, and, in particular, other forms of non-trade barriers.
After that, they suggested that Thailand’s effective tariff rate on US imports across the board was stepped up to 72%.
Therefore, the US administration proposed a ‘kind’ approach and would impose a 36% tariff structure. In brief, half the Thai rate. Significantly, this has now already gone into effect and impacts all Thai exports from midnight in the United States.
In addition, other countries were also hit with the same formula. At length, this saw Cambodia slapped with a massive 49% tariff rate, with Vietnam not far behind at 46%. Meanwhile, the European Union received a 20% rate, while countries with more favourable tariff structures, such as the United Kingdom, only received a 10% charge. This is also the new universal or basic rate.
The Philippines saw a 17% level, while Malaysia was hit with 24% and Indonesia 32%.
Widespread tariff increases hit ASEAN and EU, with Cambodia, Vietnam, and Indonesia facing steep penalties
Furthermore, the US President, in the Rose Garden, confirmed that the 25% tariff on car and vehicle imports also goes ahead. In addition, the 25% aluminium tariff, increased from a previous rate of 10%, would be extended. For instance, it would now apply to aluminium cans, including empty containers. The latter will certainly impact Thailand’s growing export market in this area.
Last year, Thailand exported 42,000 cars to the United States and $500 million worth of aluminium.
Nevertheless, even a 10% tariff rate would curtail Thailand’s projected GDP growth rate this year. In short, it would leave it at 1.3%. Therefore, the government must now be seriously concerned. Indeed, it could be facing a significant economic reversal.
For instance, in absolute terms, the tariff represents a cost of ฿15 billion to the Thai economy. That is approximately 3% of GDP. In essence, it would wipe out any potential growth this year. At the same time, this is assuming the costs are borne by exporters.
Thai economy faces major setback as new tariffs threaten ฿15 billion in losses and 2025 GDP growth
Nonetheless, the impact could be steeper as many of these exports may simply disappear. On Thursday, for example, the Prime Minister was asked about Chinese exports being re-exported through Thailand. She replied that this matter must be examined closely.
Certainly, on Thursday, fear and worrry was not how Prime Minister Paetongtarn Shinawatra chose to address the situation. She gave an interview to reporters after discussions with Deputy Minister of Finance Julapun Amornvivat.
PM Paetongtarn Shinawatra assured response measures, including tax adjustments and a negotiation team, aiming for a compromise and preventing any impact on GDP.
Prime Minister Paetongtarn Shinawatra reassured that there is no need to worry about the US imposing a 36% tariff on Thai imports, as measures are already in place to address the issue.
These include restructuring import tariffs and forming a negotiation team, with confidence that talks can yield favourable outcomes. She firmly stated that the move would not impact Thailand’s GDP.
Thai government scrambles to contain fallout, insists GDP will not be impacted by harsh new US tariffs
Regarding the US decision to impose a 36% import tariff on Thai products—one of the highest rates in ASEAN—Paetongtarn explained that Thailand needs to adjust its import tax structure with the US and establish a task force for negotiations.
Basically, she said she was confident that such talks would prove positive and a solution would be found. Certainly, she accepted that Thailand would have to modify its import structure to open up its market to US goods.
At length, she was insistent that Thailand’s GDP this year would not be impacted. She indicated that before Wednesday’s announcement in America, Thailand had been planning its response. That would include short-term measures in addition to preparing for negotiations.
“We won’t let it get to where GDP will miss the target,” the PM said. “Certainly, we have a strong plan. We have prepared several steps, including sending our permanent secretary to talk with them. I think we can still negotiate.”
Thailand prepares for negotiations with US, PM insists trade talks can secure a positive outcome
Meanwhile, the Ministry of Finance is working on steps to assist Thai exporters in the short term. Ms Paetongtarn said that the Thai government would help mitigate the impact.
The PM said that Thailand’s economic management team was surprised at the US figure of 72%. At this time, the Thai team was studying this and trying to understand the thinking of US trade officials.
Certainly, this indicates that Thailand’s response will not be combative. The kingdom will now try to reach out to the United States and hold independent trade talks.
Before yesterday’s announcement, many analysts had suggested that Thailand’s tariff rate on US goods was 9%, while the US, in contrast, charged 2.5%. Significantly, the United States has reportedly developed a formula to account for a wider range of trade barriers and lumped these into the tariff structure.
Undoubtedly, Thai officials and indeed those outside will be closely observing trade today and over the next few days to monitor the real impact of yesterday’s bombshell announcement.
Thai officials analyse shock 36% effective tariff, as independent trade talks with US take shape
The Thai government is now preparing for urgent trade talks with the Americans. Prime Minister Paetongtarn on Thursday accepted that the trade environment has now changed. Gone are macro models, and instead, we have bilateral negotiations.
She indicated that the permanent secretaries at the Ministry of Finance and Commerce will play key roles. In addition, the PM’s own policy adviser on US trade, Phansak Vinyarat, will also be involved.
At this time, Thailand’s negotiating team is taking shape and urgently receiving all materials in order to prepare for engagement with US counterparts.
Thailand shifts to bilateral trade negotiations, forming a high-level team to address the US tariff crisis
On Friday, President Trump was in high spirits as he launched what he termed a historic move for the United States. He assured his invited audience that it would be remembered as a turning point.
In particular, he brought up a Detroit, Michigan union worker to help explain what the changes will mean for US workers.
Thailand braces for Trump’s reciprocal tariffs due on Wednesday. It’s Liberation Day for the US economy
After that, he mentioned Thailand when it came to motorbikes. Basically, he said Thailand can export a motorbike to the United States with just a 2.4% tariff. However, the other way, US motorbike firms were charged a tariff rate of over 70%. Therefore, he assured his audience this was now about to be halted.
He also signed the reciprocal tariff order, which was implemented later at all United States points of entry.
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Further reading:
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
Economy sees sharp setback with lower private spending, investment and foreign tourism income
