Thailand plans to propose eliminating tariffs during crucial trade negotiations with the United States tonight
In a significant move aimed at bolstering trade relations and mitigating potential US tariffs, the Thai government has proposed a substantial trade offer to the United States. This offer involves the elimination of import duties on a wide range of US products, including agricultural and industrial goods, with a focus on those in short supply domestically.
The initial report suggested that Thailand would reduce tariffs on 10,000 product lines to 0%, but recent communications indicate a broader offer, potentially covering tens of thousands of products. This proposal is part of Thailand's strategy to avoid a punitive tariff, possibly as high as 36%, threatened by the US.
Thailand is under pressure from trade agreements secured by other ASEAN countries, such as Vietnam and Indonesia, which have tariff rates of 20% and 19%, respectively. In response, Thailand plans to acquire Boeing aircraft and commit to a 20-year LNG import deal with the US to reduce its trade surplus by 70% within five years.
In preparation for potential tariffs, Thailand has prepared contingency plans for both a 36% and a 20% tariff scenario, assessing the impact on various industries and workers. The government has also proposed a soft loan scheme worth 200 billion baht to support businesses affected by the opening of the US market to Thai goods at 0% tariffs.
The economic impact of waiving US import duties would result in a revenue loss of about 35.9 billion baht annually, which is just 0.2% of Thailand's total government revenue. However, the proposal could help stabilise the Thai economy by preventing deeper damage from potential high tariffs and maintaining competitiveness in the global market.
The Thai delegation, led by Deputy Prime Minister and Finance Minister Pichai Chunhavajira, will present newly revised and expanded proposals in a video conference with the Office of the United States Trade Representative (USTR). Beyond the substantial offer of duty-free access for a vast array of goods, additional proposals will be put forward to strengthen trade ties.
The Thai government's contingency plans for potential US tariffs are awaiting the outcome of tonight's negotiations. The Ministry of Commerce has tasked relevant agencies with developing detailed relief plans in case of potential US tariff impositions. The Thai government is focusing on agricultural trade deals with the US to counter US tariffs.
As the negotiations unfold, it remains to be seen whether the US will accept Thailand's offer and whether this move will mark a significant step forward in strengthening trade ties between the two nations.
- The Thai government's strategy to avoid potential US tariffs also involves commitment to financial investments, as they plan to acquire Boeing aircraft and commit to a 20-year LNG import deal with the US to reduce its trade surplus.
- The economic impact of waiving US import duties would not only result in a significant revenue loss for Thailand but could also help in maintaining competitiveness in the global market and stabilizing the Thai economy.
- In addition to the substantial offer of duty-free access for a vast array of goods, the Thai delegation may propose additional measures to strengthen trade ties with the US, as they aim to counter US tariffs through agricultural trade deals.