Thai finance chief sees US cutting 36% tariff on fresh proposal

The Star

2 days ago

BANGKOK (Bloomberg): Thailand expects the US to reduce a threatened tariff on its exports from 36% to a level in line with regional neighbors after presenting a "very substantial improvement' in a fresh round of talks, Finance Minister Pichai Chunhavajira said.
Thailand was able to meet all US demands with its third proposal, scrapping tariffs and non-tariff barriers on more American goods, Pichai told reporters in Bangkok on Friday. Thai and US officials discussed tariffs, transshipments, imports of US goods and Thai investments in the US over a conference call on Thursday, he said.
"We hit the target in the best way we could, not to the point of making offers against our will,' said Pichai, who leads Thailand's negotiation team. "As we're in this region, we predict that we'll be getting similar rates. That means not more than 20%.'
President Donald Trump may be informed as soon as Friday about the progress of the Thai and US talks, Pichai said. Trump has announced deals for 20% tariffs on Vietnamese goods and 19% for Indonesia.
Pichai added, however, that the US may impose different tariff rates on different tiers of Thai products.
Bangkok sweetened its trade proposal to the US after Trump announced last week that the 36% tariff level would start Aug. 1.
A failure to lower tariff rates imposed by its largest export market, which accounted for about 18% of Thailand's total shipments last year, could shave as much as one percentage point off the country's projected growth.
After two rounds of ministerial-level talks, Thailand has offered to significantly increase purchases of US goods for which there is domestic demand - including agricultural products, liquefied natural gas and Boeing Co. aircraft - to reduce a trade surplus which stood at $46 billion last year. Thailand has also pledged to invest more in the US, including in the Trump-backed Alaska gas project.
The latest proposal widens a list of products that will be subject to zero tariffs to 90% of all items, up from over 60% previously, according to a trade group that advises Pichai. The new offers could potentially help cut the trade surplus by 70% within three years and lead to balanced trade within five years, it said.
"Thailand doing this and opening its market means that the country will have to become more proactive,' Pichai said. "We won't just be importing products to cut the trade surplus, but the size of our economy must also become bigger. We must sell more goods to more places in the world too.'
Pichai said the Thai government will monitor the impact of more US goods on the country's own agricultural, industrial and supply chain sectors, as well as on small and medium enterprises. He said authorities will urgently address any fallout and help rebuild their competitiveness.
Thai growth is already under pressure from Southeast Asia's highest household debt and sluggish domestic consumption. A favorable deal would also help ease investor concerns over political turmoil. Prime Minister Paetongtarn Shinawatra was recently suspended by a court over alleged misconduct in handling a border dispute with Cambodia.
Thailand's exports rose about 15% in the first five months of the year, driven largely by front-loading during the 90-day pause to allow tariff talks.
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