Team Thailand needs to tweak its strategy to deal with Trump’s tariffs

Thailand would need to overhaul its negotiation strategy on reciprocal tariffs with the Donald Trump administration, following a shock 36 per cent import tax levied by Washington effective from August, experts said.

Negotiating with the Trump administration is akin to conducting an orchestra, says seasoned diplomat Pisan Manawapat. The Thai team must have a professional "conductor" who understands strategy and can read Trump’s mind with precision, he suggests.

“This conductor must be highly skilled, able to anticipate Trump’s moves, and know exactly which cards to play,” Pisan, a former Thai ambassador to the United States, told a Thai PBS talk show.

Experienced diplomatic personnel such as senior diplomats from the Ministry of Foreign Affairs should be utilized instead of hiring costly lobbyists, whose services could cost as much as 97 million baht without any guaranteed outcome, he said.

Shortly after Deputy Prime Minister and Finance Minister Pichai Chunhavajira arrived from Washington after leading a trade mission, Trump sent a letter dated July 7, which said that the US would charge Thailand a tariff of “only” 36 per cent on all Thai products entering the US market.

Good transshipped (notably from China) to evade higher tariffs would be subjected to that higher tariff, the letter said.

“Please understand that the 36 per cent number is far less than what is needed to eliminate the trade deficit disparity we have with your country,” says the letter signed by Trump to acting Prime Minister Suriya Juangroongruangkit.

Not a big enough deal

Chief negotiator Pichai said he was surprised by the high tariff rate and speculated that his previous offer for the trade deal might not have reached the White House when Trump signed the letter to Thailand.

Under his strategy Thailand aimed to reduce its current trade surplus of US$46 billion with the US by 70 per cent within five years.

In addition, Thailand would offer greater market access to US agricultural and industrial products.

However, restrictions on certain sensitive items will be relaxed gradually. In line with this, Thailand also planned to increase imports of US goods that were still in short supply domestically, he said.

When considered alongside the proposals previously presented by the government, it appears that these imports were likely to focus on agricultural products such as corn and soybeans, which the Thai side has consistently promoted as part of a win-win strategy since April, he said.

Pichai said that mechanisms like PTT would be used to purchase up to 2 million tons of liquefied natural gas (LNG) per year and ethane from the Alaska gas project over 20 years.

Additionally, Thai Airways is expected to place orders for 80 Boeing aircraft, he said. In February 2024, Thai Airways finalized a firm order for 45 Boeing 787-9 Dreamliners, with options for an additional 35 aircraft, potentially expanding the deal to 80 jets.

“What we’re offering is a deal that benefits both sides. The US gets increased trade, and Thailand gets a chance to reform its system and streamline the bureaucracy,” Pichai told the media.

A new deal?

The Pichai-led Team Thailand met with the government’s advisors and senior officials from relevant agencies on July 11 to repackage and readjust the Thai proposal for a new round of trade talks with the US. Former prime minister Thaksin Shinawatra was also invited to the meeting to share his views and opinions, Pichai said.

The discussions concluded with guidelines in case Thailand needed to import more from the US. Imports from the US must not adversely affect domestic producers, particularly farmers and small-scale industries, he said

Such imports must be managed appropriately and fairly, avoiding inappropriate practices. This is also seen as an opportunity to improve regulatory oversight and efficiency for both imports and exports, Pichai said, adding the government would put in place measures to assist those affected by the US tariff hike.

Pichai reaffirmed Thailand’s commitment to doing its utmost in the negotiations. He stressed that many aspects of the issue go beyond tariff rates alone and included broader concerns, which would be clarified in detail.

However, the issues raised during the July 11 meeting did not cover a wide range of trade deals between the two countries, according to a source.

Supawut Saichuea, a government advisor, told the media that the key demands from the US in exchange for lifting the 36 per cent tariff covered four main areas: liberalization of agricultural products, the financial sector, telecommunications, and procurement of military equipment, he said.

Greater market access

The US demands were mentioned in the US Trade Representative’s 2025 National Trade Estimate Report on Foreign Trade Barriers, according to Supawut.

The report mapped out five key areas on market access for American farm products, customs transparency and anti-transshipment measures, intellectual property, liberalization of certain sectors, and government procurement.

Market access for US agriculture is top priority, due to domestic political pressure from farm states. The Trump administration is seeking access to the Thai market for corn, soybean, beef and wine.

On customs transparency and anti-transshipment measures, the Trump administration wanted Thailand to address its concern that Bangkok may be a conduit for Chinese goods by implementing or upgrading origin verification systems and allowing factory inspections.

Regarding the intellectual property enforcement, Thailand needed to commit to timelines for improving patent registration and combating online piracy, and establish an IP task force with US stakeholders to build credibility.

On the liberalization of selected services, Thailand needed to offer openings in fintech, logistics, and cloud computing, as well as full liberalization of telecom and banking.

For government procurement and strategic purchases, Thailand is required to finalize the Boeing aircraft deal and LNG/ethane imports from Alaska. This would be framed as part of a strategic US-Thailand economic partnership.

Energy is key

An analyst in the energy sector said an offer to open the market and create more opportunities in the energy exploration and development sector could be more attractive for the Trump administration to make a deal with Thailand.

The role of US energy companies in Thailand has significantly declined, as existing concessions have gradually expired and no serious efforts have been made to explore new energy fields, he said.

As a result, the US market share in Thailand and the region has diminished considerably, although the American companies once possessed deep expertise and were a pioneer in the energy business in Thailand.

In the past, the US not only led energy development in the country but also used Thailand as a base and hub to expand its energy ventures throughout the region, he said.