Thai Industry Chief Urges 'Homework' as US-China Trade Truce Offers Hope

 

Hopes have risen for a de-escalation in the protracted trade war between the United States and China, following an agreement by the two economic powerhouses to temporarily reduce import duties for a 90-day period.

 

Under the terms of the truce, the US will lower tariffs on Chinese goods to 30%, while China will reciprocate by reducing levies on American imports to 10%.

 

Kriangkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), speaking to Krungthep Turakij, suggested that this move signals a more positive climate, offering both nations a potential way out of the escalating conflict.

 

He pointed out that the US had imposed what he described as the world's highest tariffs on Chinese goods, reaching a staggering 145%, with China responding in kind with duties of up to 125% on imports from across the pond.

 

Kriangkrai noted that the previous round of retaliatory measures had begun to bite in the US, with domestic consumers protesting against shortages of certain goods.

 

US President Donald Trump reportedly came under pressure from department store chains and importers, who warned of imminent stockouts that could lead to public discontent.

 

At the time, Trump had repeatedly claimed discussions with Chinese President Xi Jinping were underway and that he was awaiting a call. However, Beijing indicated no such contact had taken place.

 

He further explained that a meeting held in Geneva, Switzerland, with Swiss mediation, brought together key figures from both sides: Chinese Vice Premier He Lifeng, US Treasury Secretary Scott Bessent, and US Trade Representative Jamieson Greer.
 

 

This high-level engagement ultimately led to the current agreement. The positive outcome was reflected in a strengthening of the US dollar and a fall in the price of gold, traditionally seen as a safe-haven asset during times of uncertainty. US stock markets also reacted favourably, indicating a positive sentiment.

 

"The atmosphere has now eased somewhat, even if it's just for the short term," Kriangkrai commented. "It's a welcome sign that these two crucial nations have engaged in two days of talks and reached an agreement that offers a glimmer of hope. The overall intense trade war situation has seen some respite. Nevertheless, both sides now face a significant task in preparing for what comes next within this 90-day window."

 

The FTI chairman highlighted that this 90-day period necessitates intensive preparation on both sides, particularly given the key sticking point raised by the US: the demand for greater market access in China.

 

This is understood to include the US pushing for China to open its service sector, including platforms like Google, Line, and various social media outlets, which have previously been restricted in favour of domestic Chinese alternatives. Simultaneously, the US has pursued measures against Chinese-owned entities like TikTok.

 

Kriangkrai suggested that while the full details of the agreement remain undisclosed, it is known that China has historically been cautious about granting greater market access to the US across numerous sectors.

 

However, the reduction of tariffs to 30% sends a signal to other nations.

 

He noted that even after facing a 145% tariff from the US, China managed to negotiate it down to 30%, while the US, having faced a 125% Chinese tariff, now sees a 10% rate. 
 

 

This interim period is set to conclude on 9th August 2025, providing Thailand and other countries with a 90-day window until 7th July 2025, offering hope for potential tariff reductions in their own cases.

 

Looking ahead, Kriangkrai stressed that countries like Vietnam, Japan, and India, who are also in the queue for trade negotiations with the US, must undertake thorough preparations. 

 

While Thailand is still awaiting its turn and currently faces a 10% US tariff (a more favourable position than China's previous rate), he also pointed out that even with a 30% tariff, China is likely to remain a significant exporter due to its robust cost management.

 

He cited the example of Chinese electric vehicle (EV) exports, which have continued despite tariff hikes in the US and Europe, attributing this to China's ability to reduce production costs and absorb tax burdens more effectively than other nations.

 

"We must now wait and see when Thailand and other Southeast Asian nations will engage in negotiations with the US and what the outcomes will be," Kriangkrai stated.

 

Initially, he observed that the situation now appears more promising than when no talks were underway, although the unexpected scale of tariff reductions indicates that further negotiations are necessary to reach a mutually acceptable agreement.

 

This development aligns with expectations, as neither country could sustain the previous impasse without damaging their economies—evidenced by the US’s inflation surge and goods shortages, which limit short-term alternatives to Chinese manufacturing.

 

With over $400 billion worth of goods imported annually from China, diversification alone isn't a quick fix, and the US may have underestimated China's resolve to stand firm. China perceives US tariffs as unfair, and both nations must approach future talks with diligence and cooperation to foster a more stable global trade environment.