Thailand Plans to Restructure Taxes in Exchange for Halting U.S. Retaliatory Tariffs

This year, trade relations between Thailand and the U.S. are facing new challenges as the U.S. government under President Donald Trump prepares to implement “reciprocal tariff” starting on April 2, 2025. This measure will allow the U.S. to raise tariffs on imports from trading partners to match the tariffs those countries charge on U.S. goods.

For Thailand, which relies heavily on the U.S. market as its primary trading partner, this new policy could significantly impact the export sector. The Ministry of Commerce has been quickly developing strategies to address this, with the following main approaches:

Restructure Import Taxes
Thailand may revise the import tax rates on certain goods to balance out the pressure from the U.S.
Increase Imports from the U.S.
Thailand could increase imports of U.S. goods, such as airplanes, soybeans, and corn, to show cooperation in reducing the trade surplus.
Plan Negotiations with the U.S.The Ministry of Commerce will collaborate closely with the private sector to create appropriate negotiation strategies and avoid disclosing all plans before talks begin.

Potential Impacts on Thai Businesses

Thai Exporters
Thai goods that are most likely to be impacted include electronics, electrical appliances, rubber products, gemstones, jewelry, and automobiles, which are key exports to the U.S. If tariffs are raised, the cost of goods will increase, making it harder for Thai products to compete in the U.S. market.
Steel and Construction Material Industries
The U.S. raised tariffs on steel and aluminum from all countries to 25% starting on March 12, 2025. This could lead to an increase of steel from other countries, especially China, Vietnam, and India, which are restricted from exporting to the U.S., flooding the Thai market and affecting domestic producers.
Thai SMEs
Small and medium-sized enterprises (SMEs), which account for over 260 billion baht in exports to the U.S., could face direct and indirect impacts from higher costs or changes in the supply chain

Strategies Thailand Must Pursue Moving Forward

Diversify Export Markets
To reduce dependence on the U.S. market, Thailand should focus on new markets such as BRICS, RCEP, ASEAN, and the Middle East. The country should also speed up Free Trade Agreement (FTA) negotiations with other countries.
Study Strategies of Other Countries
Countries like China, Mexico, the EU, and India are also facing U.S. tariffs. Thailand should consider adopting negotiation strategies from these countries.
Use the Opportunity for Negotiations
The U.S. tariff measures are like a new round of trade talks. Thailand needs to make the most of this chance to reduce the impact on businesses and strengthen the long-term flexibility of its economy.

April 2, 2025, will be an important date to watch, as changes in trade between Thailand and the U.S. will reveal how much they will affect each other. The Thai government and private sector will need to collaborate closely and prepare to adapt in order to maintain Thailand’s competitiveness in the global market.