Thailand moves to shield exporters from 12.5% US tariff

Thailand is accelerating assistance for exporters and continuing trade negotiations with Washington after the United States imposed an additional 12.5% tariff on most Thai goods from Friday, July 24.

The Commerce Ministry is preparing measures including low-interest loans, tax support and lower logistics costs, while seeking to complete an Agreement on Reciprocal Trade, or ART, with the United States.

The Thai Chamber of Commerce said the new duty should not substantially weaken Thailand’s competitiveness because many competing exporters face similar rates. It nevertheless urged the government to strengthen legislation concerning forced-labour goods and conclude the trade negotiations as quickly as possible.

The US Trade Representative imposed tariffs of either 10% or 12.5% on goods from 60 trading partners after investigating whether they had established and effectively enforced bans on imports produced with forced labour.

Thailand was placed in the 12.5% group because it had not adopted such an import prohibition or made an applicable commitment through an ART. The action concerns Thailand’s system for blocking forced-labour imports, rather than constituting a finding that all Thai exports were themselves produced with forced labour.

The duties took effect at 12.01am US Eastern time on July 24, replacing a temporary 10% global tariff that expired at the same moment. Goods already in transit are exempt if they meet the conditions for entry before 12.01am on July 28.

Chamber sees limited competitive disadvantage

Poj Aramwattananont, chairman of the Thai Chamber of Commerce and the Board of Trade of Thailand, said most of Thailand’s competitors had been assigned the same or a similar tariff, leaving the overall competitive landscape in the US market broadly unchanged.

Cambodia, Indonesia and Malaysia are among the economies receiving the lower 10% rate. Poj acknowledged that these countries could gain some advantage, but said the 2.5-percentage-point difference was narrower than the gaps created by previous US tariff measures.

The Commerce Ministry’s initial assessment identified about 2,120 Thai export lines as exempt from the additional tariff, representing more than half the value of the country’s shipments to the US.

The ministry listed integrated circuits, data-storage devices, aircraft parts, natural rubber, tapioca starch, pineapple, coconut products and cane sugar among the examples. Exporters will still need to check the eight-digit US tariff classification for each product because some exemptions apply only to specified codes.

The US action also excludes goods already subject to national-security tariffs under Section 232, including automobiles and parts, steel, aluminium and copper. Other exemptions cover specified raw materials, goods that cannot be produced sufficiently in the US and products whose inclusion could cause wider economic disruption.

Commerce prepares exporter support

Deputy Prime Minister and Commerce Minister Suphajee Suthumpun said Thailand was continuing discussions with the United States in pursuit of an agreement providing balanced benefits to both countries.

She said any settlement must preserve public health, national security, the public interest and the government’s ability to set domestic policy.

Dr Kirida Bhaopichitr, an assistant minister attached to the Commerce Ministry, said Thailand’s ART negotiations could take longer than those of some neighbouring countries because of sensitive issues and domestic legal constraints that Bangkok could not simply waive.

Dr Kirida added Thailand also remains subject to a separate Section 301 investigation into structural excess capacity and manufacturing production. The US investigation covers 16 economies, including China, the European Union, Thailand, Malaysia, Indonesia, Vietnam, Japan and South Korea.

Washington has not announced its final findings or any resulting tariffs.

The ministry is preparing parallel measures for businesses directly exposed to the tariff, including, low-interest financing to strengthen liquidity, tax support for exporters, measures to reduce transport costs and improve logistics, and greater use of Thai raw materials and components to strengthen domestic supply chains.

It also plans to expand into new export markets while preserving existing customers, reducing excessive dependence on any single destination and making Thai trade more resilient to future policy changes.

Labour law and further tariff risk

Poj said Thailand had not faced a systemic forced-labour problem for years, but still needed clearer laws and enforcement mechanisms to address US concerns and align the country with international standards.

He called for greater transparency throughout Thai supply chains, saying this could improve confidence among investors and trading partners while helping Thailand qualify for more favourable treatment in the future.

The chamber and the University of the Thai Chamber of Commerce have been gathering information, surveying businesses and providing findings to the Commerce Ministry for use in negotiations. Poj said the public and private sectors needed to work closely together to establish a position that protected national interests while maintaining international confidence. The Commerce Ministry and Thai Chamber said the investigation required close attention because any future action could target particular manufacturing sectors in addition to the newly imposed forced-labour duty.

Thailand’s immediate priorities are therefore to deliver support to affected exporters, verify which products qualify for exemptions, strengthen its legal mechanism against forced-labour imports and secure an ART that preserves the country’s competitiveness before further US trade measures are decided.