PM Paetongtarn addresses the nation in shock over last week’s earthquake and this week’s Trump tariff bombshell. Thailand’s exports face new challenges as reciprocal tariffs are set to hit 36% by Wednesday, with talks on seeking better terms with the US.
Following last week’s earthquake that hit Bangkok and this week’s Trump tariff bombshell, the PM addressed the nation on Sunday. As the initial phase of Trump’s reciprocal tariff regime went into effect at midnight on Saturday US time, Thailand’s threatened exporters may still have time. Goods already at sea will not be charged the new rate which climbs to 36% on Wednesday. Furthermore, some exports will not be subject to the regime such as medical exports. Meanwhile, Prime Minister Paetongtarn Shinawatra on Sunday confirmed that Minister of Finance Pichai Chunhavajira was travelling to the United States next week to present Thailand’s case for a better trade deal. Deputy Prime Minister Pichai will also bring with him a message that Thailand was not just an exporter but a friend to America.
Thailand is to send Minister of Finance and Deputy Prime Minister Pichai Chunhavajira to the United States next week. In short, Deputy Prime Minister Pichai will lead negotiations with the US administration for Thailand. On Sunday Prime Minister Paetongtarn Shinawatra gave a national television address to the nation. At length, it touched on both last week’s devastating earthquake and the economic equivalent last Wednesday.
Basically, early on Thursday morning in Thailand US President Trump imposed a 36% reciprocal tariff on Thai imports. Certainly another bombshell for the government which has not been expecting anything as severe.
Prime Minister Paetongtarn acknowledges the economic crisis caused by the imposition of tariffs by Trump
In turn, Mr Pichai and the government are ready to propose to US Commerce Secretary Howard Lutnick that Thailand purchase more US agricultural produce, aircraft, and machinery.
At the same time, the kingdom is ready to reduce the tariff barrier presently in force. Significantly, Ms Paetongtarn on Sunday spoke about suppressing the use of Thailand as a base for other countries’ exports.
Certainly, this is an admission that this is presently happening. At the same time, it would signal a strong change of tack for Thai authorities. In addition, Prime Minister Paetongtarn on Monday had another message from America, one that could be carried by Mr Pichai.
In summary, Thailand stands with the United States not just as an exporter and trade partner but also as a friend. Certainly, this is the overarching message. For instance, as this story unfolds, it becomes clear that the sea change being pushed for by the Trump Administration directly impacts China.
Trade talks in Washington show the US is pushing for a deeper trade alignment with Thailand on key exports
That was notably a point put forward on Sunday by Dr. Suriya Sai Katasila, Dean of the College of Social Leadership and Innovation, at Rangsit University. In short, the academic posits that trade negotiations are diplomacy by proxy.
For example, government sources last month spoke of economic reasons for the deportation of detained Uyghurs under pressure from Beijing. In addition, China is openly using its country’s external tourism drive to influence countries’ ties and relations.
Significantly, Chinese tourist flows have lowered into Thailand. While the reason is stated to be safety concerns, the flow of tourists has been shifted towards Japan. Nevertheless, Thailand remains an approved destination by Chinese authorities. At the same time, both countries signed a visa waiver programme last year.
Nonetheless, despite an agreement between both countries in February this year to bolster foreign tourism, Chinese arrivals continue to dwindle.
Thai officials discuss diversifying export markets to reduce dependency on China’s growing influence
In addition to lowering tariffs on US imports, Ms Paetongtarn spoke of negotiating favourable terms for Thai investment in America. At the same time, the Prime Minister accepted that this was a crisis. She was particularly concerned about Thai exports of electronic products, processed foods, and agricultural products.
She told the Thai people that it would however be overcome.
“We will tell the US government that Thailand is not only an exporter but also an ally and economic partner that the US can rely on in the long term,” she said.
The Prime Minister again confirmed a high-level meeting of top officials will be convened at Government House on April 8th. This would be the day before the reciprocal tariffs go into effect. Indeed, the 10% informal reciprocal tariff went into effect at 00.01 hours on April 5th in Washington DC.
Prime Minister Paetongtarn confirms high-level meeting to discuss the impact of new tariffs on the Thai economy
In the meantime, there may be hope for Thai negotiators. Or at least a small window of time. Wutthikrai Leewiraphan, Permanent Secretary of the Ministry of Commerce and Chairman of the US Trade Policy Working Group, certainly had some good news.
Firstly, the 25% tariff on cars, steel and aluminium previously imposed by Trump would remain at this level. They therefore are below the 36% rate scheduled for April 9th.
Secondly, all imports or goods in transport that left before April 5th for the 10% rate and April 9th for the 36% rate will not be subject to the new tariff charge. This is strictly on condition that they arrive by May 27th.
Significantly, several areas are exempt from the reciprocal tariff rate. In brief, they include copper, medicines, medical supplies, semiconductors, processed wood, certain types of essential minerals, energy and energy products.
Thailand welcomes potential exemptions from new tariffs while continuing to negotiate with the US
In her address on Sunday, Prime Minister Paetongtarn noted no country had yet been offered relief from the tariff structure.
Meanwhile, Vietnam, which has found itself home to many Western manufacturers, is pushing hard for such relief. Communist Party Secretary-General To Lam reportedly had a productive call with President Trump that weekend.
Previously, Hanoi lowered unilaterally its tariff rates on some US imports.
Meanwhile, in Hanoi, the Vietnam Chamber of Commerce and Industry and the American Chamber of Commerce sprang into action. After that, they sent a letter to Commerce Secretary Howard Lutnick. Of course, they requested suspension of the whacking 46% tariff being imposed on April 9th.
Vietnam pushes for suspension of higher tariffs in a bid to ease trade tensions and reduce economic impacts
Certainly, the heightened tariff is accompanied by a massive $123.5 billion trade deficit with the United States in 2024. At the same time, a certain proportion of this export product is also reshipped from China.
In effect, this is what is ratcheting up the tensions between China and the United States. Certainly, this is also very different from Trump’s first trade war.
It is undoubtedly far more dangerous and threatening. Indeed the stakes could not be higher. Not just for regional economies but also for foreign residents in Southeast Asian countries.
“Lower tariffs for products coming into Vietnam, and for products reaching the American consumer is what will help US companies, the economy, and consumers,” AmCham and VCCI said in their statement. “Higher tariffs will not.”
Heightened US tariffs pose a significant threat to regional economies and global stability in Southeast Asia
Finally, Prime Minister Paetongtarn also Sunday highlighted the importance of diversifying Thailand’s exports.
Significantly, she did not mention the stalled European Union talks with Thailand of a free trade pact. These have been impeded since the Uyghur deportations in February. This is yet another example of how foreign trade interfaces with diplomacy and geopolitics.
Prime Minister Paetongtarn instead talked about free trade pacts with the Middle East, South America and Africa.
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“I would like to assure you that you are not alone and fighting alone. The government will have urgent short-term and long-term relief measures to help both SMEs and large industries. Certainly, we need to see an acceleration of the expansion of new export markets. It will also spread the risks of the Thai business sector. We are committed to negotiating trade to open new markets in the Middle East, Europe and India by accelerating FTA negotiations,” the Prime Minister said.
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Further reading:
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
Economy sees sharp setback with lower private spending, investment and foreign tourism income
