Thailand has misjudged the US in tariff talks - Former finance minister

Former finance minister Korn Chatikavanij said today that the Thai negotiating position on tariff talks has misjudged its US counterpart, with its win-win approach, as the US believes that Thailand has enjoyed a trade surplus for a long time and it is now about time for the US to reverse the position.

He described the 36% tariff imposed on Thai exports to the US market as the worst ever encountered by Thailand in its long history of trade relations between the two countries.

He admitted, however, that the US holds the upper hand and the chance of clinching a win-win deal is very slim.

In the case of Vietnam, which is facing a 20% tariff, Korn said that they have been bold enough to propose zero tariffs on imports from the US, because the country believes that it can still compete and is ready to compete, compared to Thailand, in all industrial segments.

Korn also questioned the strategy of Thai negotiating team, led by Finance Minister Pichai Chunhavajira, as to whether it has been trying to protect the vested interests of somebody in this country.

Phiphat Luengnaruemitchai, chief economist at Kiatnakin Phatra Bank, said that the Trump administration’s announcement of the imposition of a 36% tariff on goods from Thailand, as well as several other countries, was a signal that it is not happy with Thailand’s tariff proposal, but is not closing the door on further negotiations.

With such a high tariff, he said Thailand will lose its competitiveness in the US market to Vietnam and Mexico, which are facing lower tariffs.

He noted that Thailand is now being forced to open the domestic market to US imports, in return for saving its exports, such as by lifting of non-tariff barriers on the agricultural sector, which will affect a lot of people in the country.

A win-win approach is out of the question in the present situation, claimed Phiphat, as he recommended a give-and-take approach instead. He warned the government to be cautious and to take steps to mitigate the impacts expected from this approach.

He also advises the Finance, Commerce and Agriculture ministries, as well as the private sector, to work together, to convey a message to the US and foreign investors that Thailand is ready to open up to high-tech industries, such as EV parts, AI hardware and data centres, and to provide attractive incentives to such investors.

Thailand should also explore new markets and enter into free trade agreements with the EU, the Regional Comprehensive Economic Partnership and the Gulf Cooperation Council.