Tariff increase supported by Prommin, claimed to be a positive outcome at 19% for the US
In a significant move aimed at boosting trade competitiveness and economic growth, Thailand and the United States have reached a landmark trade deal. The agreement, effective from August 7, 2025, will see a reduction in reciprocal tariffs from 36% to 19% on goods imported or exported between the two countries.
According to Dr Prommin Lertsuridej, secretary-general to the prime minister, this deal will pave the way for enhanced trade and market access for Thai businesses. Key details of the agreement include a reduction in the tariff rate from 36% to 19%, the opening of Thailand's market to over 10,000 U.S. products at a 0% tariff, particularly including agricultural goods, and an increase in quotas for sensitive agricultural imports from the U.S.
The agreement will undergo parliamentary approval in Thailand following a formal announcement from the U.S. Trade Representative. Final customs duty amendments will be presented to Thailand's parliament in the coming months.
To mitigate any adverse effects on the Thai economy, the government is preparing compensation packages and support funds, estimated at around 1 billion baht, to aid sectors and businesses affected by the tariff changes, such as electronics, processed foods, electrical appliances, and diamond and gemstone exporters.
Further trade talks are planned to address non-tariff issues, including rules of origin and regional value content requirements to facilitate trade flow and maximize benefits for Thai businesses.
This deal marks the end of the crisis phase of the global trade war sparked by the Trump-era tariff regime. With a tariff rate of 19%, Thailand is now on a level playing field with regional exporters, potentially giving it a slight edge over some countries.
The deputy prime minister and finance minister, Pichai Chunhavajira, has outlined the plan for economic restructuring, focusing on sectors that can benefit from this new trade agreement. The government's responsibilities continue after the resolution of the trade conflict, with the aim of ensuring a smooth transition and sustainable growth for the Thai economy.
Once approved, the deal will be a significant step towards strengthening the economic ties between Thailand and the United States, fostering mutual growth and development. The process of approval and implementation will be transparent and in line with the law, ensuring that all parties benefit fairly from this new agreement.
References:
- Thailand-US Trade Deal: What's in It for Thailand?
- Thailand and the U.S. Agree on Trade Deal
- Thailand-U.S. Trade Talks: Non-Tariff Issues on the Agenda
- Thailand's Economic Restructuring Plan
- Thailand-U.S. Trade Deal: Tariff Reduction Details
The reduction in reciprocal tariffs from 36% to 19% on goods imported or exported between Thailand and the United States, as a result of the trade deal, is expected to provide a significant boost for Thai businesses in the finance and industry sectors. To prepare for potential challenges and support affected businesses, the government has allocated compensation packages and support funds worth approximately 1 billion baht for sectors including electronics, processed foods, electrical appliances, and diamond and gemstone exporters. In addition to tariff reductions, future trade talks will address non-tariff issues, including rules of origin and regional value content requirements, to further facilitate trade flow and maximize benefits for Thai businesses in these sectors.
