The Ripple Effect: How Trump's “America First” Tariffs Impact Thai Trade

Under the “America First” and “Reciprocal Trade and Tariffs” framework announced on April 3, 2025, the United States has implemented a minimum import tariff of 10% on goods originating from all countries. Additionally, an escalating tariff system will be applied to nations that maintain a bilateral trade surplus with the United States and those are identified as engaging in unfair trade practices. These practices include, but are not limited to, import duties, non-tariff barriers, and various regulatory fees. The tariff rate imposed on such countries will be calculated as 50% of the effective tariff rate that the U.S. goods face when entering their markets.

Thailand is poised to experience significant economic consequences as the United States imposes a retaliatory import tariff of 37% on Thai goods, effective April 9, 2025. However, after the measure was in force for only a few hours, the president ordered a temporary halt and postponed the enforcement for a 90-day period. This substantial tariff, one of the highest in the region, is a direct result of Thailand’s considerable trade surplus with the U.S., which exceeds $40 billion out of more than $60 billion in exports, providing Thailand with a 70% trade advantage. Consequently, major Thai exports to the U.S., including mobile phones, electronics, vehicle tires, and semiconductors, are expected to encounter substantial challenges.

The measures have precipitated financial market instability, resulting in a decline in the valuations of risk assets across equity and currency markets in the affected emerging economies. Conversely, safe-haven assets such as gold have experienced increased demand and price appreciation. The Thai Baht has depreciated by 0.28%, while the yield on Thai government bonds has decreased by approximately 5 basis points, currently standing at 1.89% for the 10-year maturity. Furthermore, Thailand’s sovereign credit risk, as reflected by Credit Default Swaps, has exhibited a slight increase. Notably, the overall movement in Thai asset prices corresponds with broader market trends observed throughout the region.

In response, the Thai government has developed comprehensive short-term and long-term strategies, with a primary emphasis on proposing negotiation frameworks to the United States. These 5 frameworks aim to address trade imbalances through:

1. Increase Imports of U.S. Goods: Focus on increasing the importation of essential goods from the U.S. that meet domestic needs in Thailand, including agricultural products such as corn, soybeans, and pork offal, as well as energy products like natural gas.
2. Reduce or Eliminate Tariffs: Propose the reduction or elimination of import tariffs on over 100 goods from the U.S. In addition, review and lower tariffs on goods imported from the U.S. that are subject to high tariff rates, while also increasing import quotas where applicable.
3. Eliminate Non-Tariff Barriers: Remove non-tariff barriers to facilitate smoother and more efficient trade between Thailand and the U.S., ensuring a more open trade environment.
4. Address Misrepresentation of Thai-Origin Goods: Take measures to address issues regarding the misrepresentation of Thai-origin goods being exported to the U.S., ensuring compliance with U.S. origin labeling and trade regulations.
5. Explore U.S. Investment Opportunities: Consider exploring investment opportunities in the U.S. market, particularly in sectors such as natural gas transport infrastructure in Alaska and agricultural product processing. This would promote bilateral investment and foster economic collaboration.

The overarching objective of these measures is to help narrow the bilateral trade surplus without curtailing Thailand’s exports to the United State.

The government’s primary goal is to strengthen Thailand’s capacity to import essential goods that support its production and export sectors, with relevant agencies assigned to oversee detailed implementation. Furthermore, to address non-tariff barriers, the Thai government will undertake initiatives to streamline regulations and reduce import duties on products identified by the United States as trade impediments.

Conclusion

The significant retaliatory tariff measures implemented by the United States under the “America First” and “Reciprocal Trade and Tariffs” policies, effective as of April 9, 2025 (Although, the president has currently ordered a temporary halt, the enforcement of the measures has been postponed for a 90-day period), are having a pronounced impact on Thailand. The introduction of a substantial 37 percent import tariff—driven by the U.S. response to Thailand’s trade surplus—presents major pricing challenges for a wide range of Thai exports to the U.S. market and contributes to heightened financial market volatility. In response, the Thai government has formulated a comprehensive strategy comprising both short-term and long-term countermeasures. These include active negotiations and structural adjustments to its trade framework, aimed at mitigating adverse effects and preserving economic stability. Continued monitoring of developments and policy updates is recommended to remain informed on Thailand’s evolving approach and the broader international trade landscape.