United States and Thailand continue discussions on tax matters, awaiting seal of final deal
In a significant development, Thailand and the United States have concluded their tax and tariff negotiations, resulting in a new reciprocal tariff rate of 19% on Thai goods[3][4]. This rate, effective from August 1-7, 2025, represents a significant reduction from the previous 36% tariff. The new rate aligns Thailand with other ASEAN countries such as Indonesia, the Philippines, Malaysia, and Cambodia, which have negotiated similar tariff rates with the US[1][3][4].
The negotiations, led by Deputy Prime Minister and Finance Minister Pichai Chunhavajira, have been ongoing for several months. Pichai Chunhavajira confirmed that the negotiations were in their final stages, anticipating closure near or shortly after the August 1 deadline[1][2].
Despite ongoing border tensions with Cambodia, Pichai Chunhavajira expressed confidence that the US would understand Thailand's national security concerns and ongoing border defense operations. The border clashes were considered more psychological than a direct obstacle to reducing tariffs, with economic benefits taking priority[2].
The US has issued an executive order to reduce tariffs on Thai imports from 36% to 19%, enhancing Thailand's competitiveness in global trade. Other trade commitments include reducing Thailand's trade surplus with the US by 70% over 3-5 years, stricter origin verification rules to prevent tariff circumvention, and expanded US agricultural import quotas[3][4][5].
To mitigate impacts on Thai entrepreneurs and farmers, the government has implemented support measures such as soft loans, subsidies, and tax measures. Strategic sectors such as rice and sugar will maintain import duties to protect domestic producers[3][5].
The deal also encourages US investment in Thailand's Eastern Economic Corridor (EEC), clean energy, semiconductor/ICT sectors, and contracts to increase procurement of US LNG and aircraft, reflecting a multifaceted trade and economic partnership[5].
Pichai Chunhavajira confirmed that the Thai government has already submitted a proposal in the ongoing tax negotiations with the US. The exact timing of the announcement regarding the agreement is still uncertain, with Pichai Chunhavajira stating that a decision regarding the announcement might be made either before or after August 1[6].
Pichai Chunhavajira also raised another key point that this situation offers an opportunity to enhance the competitiveness of Thai businesses[7]. However, no new information about the details of the agreement or the exact timing of the announcement was provided.
In summary, this agreement represents a significant step forward in Thailand's trade relations with the US, offering improved trade terms after months of negotiation despite regional border tensions. The agreement balances tariff reduction with safeguards for domestic industries and enhanced economic cooperation. The US continues to monitor compliance with strict anti-circumvention measures[1][2][3][4][5].
- The reduction in the tariff rate from 36% to 19% on Thai goods, as a result of the concluded tax and tariff negotiations between Thailand and the United States, has the potential to significantly impact the economy and finance sector, creating opportunities for investing and boosting the competitiveness of Thai businesses.
- The new reciprocal tariff rate of 19% not only aligns Thailand with other ASEAN countries in their trade relations with the US but also encourages US investment in strategic sectors such as clean energy, semiconductor/ICT, and the Eastern Economic Corridor (EEC), forging a multifaceted trade and economic partnership.
- To minimize the potential negative impacts on Thai entrepreneurs and farmers due to the tariff reduction, the Thai government has implemented support measures, including soft loans, subsidies, and tax measures, while maintaining import duties in key sectors like rice and sugar to safeguard domestic producers.
