Thailand braces for Trump tariffs, steps up US talks and FTAs

The collection of Donald Trump’s retaliatory customs tariffs under the International Emergency Economic Powers Act (IEEPA) was ruled unlawful by the US Supreme Court on February 20, 2026.

Following the Supreme Court’s ruling, the US President signed an executive order to enforce a new global customs tariff of 10% under Section 122 of the Trade Act of 1974, effective at 12:01am on February 24, 2026.

After that, on February 21, 2026, the US President announced a 15% tariff rate, describing it as a legally permitted and legally reviewed level, effective immediately, although it had not yet been issued as an executive order.

Meanwhile, the Thai government called an urgent meeting of relevant agencies on February 22, 2026, involving the Ministry of Finance, the Ministry of Commerce, the Ministry of Foreign Affairs, and the National Economic and Social Development Council (NESDC).

Ekniti Nitithanprapas, Deputy Prime Minister and Minister of Finance, said the Supreme Court decision to revoke the reciprocal tariff measure was positive for confidence in the short term, reflected in the Stock Exchange of Thailand (SET) index, which responded because the United States could not use tariff tools as conveniently as before.

Ekniti said the current average tariff rate in ASEAN is 19%, while the latest US measure sets a rate of 15% and is effective for 150 days, meaning the effective rate on some Thai products could fall to below 10%.

In addition, Thailand gains an advantage because competitor countries that previously enjoyed a 10% tariff rate have been raised to 15% as well, making Thailand’s competitiveness more equal.

“Even though this revocation does not mean trade barriers will disappear, it is a shift in form towards using other tariff tools. In the short term it benefits Thai exports significantly, because the tariff rate has fallen from the previous 19% applied to Thailand to 15%, equal to other countries,” he said.

Ekniti added that negotiations with the USTR are continuing to protect Thailand’s maximum interests and prepare for other long-term tariff measures. The Ministry of Commerce has set up a team to closely monitor developments and expects that during this period of uncertainty, exporters will rush shipments in Q1–Q2, or within the 150-day window.

Long term: push ahead with FTA talks

For the long-term strategy, the government is accelerating FTA negotiations to open as many new markets as possible, positioning Thailand as a trade and investment base and delivering maximum benefits for Thai businesses. Exports of goods and services are the core of Thailand’s economy, accounting for a combined 70% of GDP, broken down into goods at 60% and services at 10%.

“After forming a new government, we must accelerate as many FTA negotiations as possible. What we are seeing is not very different from before: both trade barriers and pressure remain. But there are clear opportunities from investment relocating production into Thailand and ASEAN,” he said.

2026 to be declared the “Year of Investment”

The government is also preparing to announce 2026 as the “Year of Investment” to capture the relocation of production bases into Thailand and ASEAN. This is reflected in applications for investment promotion at the Board of Investment (BOI), which grew by as much as 68% in 2025 from the previous year.

“During this period, Thailand must urgently unlock investment and rules that are obstacles, so that investment funds flow into the real economy and return as a key engine driving economic growth potential,” he said.

The Prime Minister has assigned the Secretary-General of the Council of State to accelerate the removal of legal restrictions that obstruct investors, and to expedite BOI-approved projects that are stalled so they can begin real investment quickly. This is intended to build on the success of the BOI Fast Pass policy, which previously stimulated investment in Q4 of 2025 without requiring public spending.

Finance Ministry confident 2026 growth can reach 3%

For Thailand’s 2026 economic outlook, he said momentum from both public and private investment should help GDP growth exceed 2%, but pushing growth to 3% is challenging due to uncontrollable external factors, including volatility in global financial markets and geopolitical issues.

“In the short term, we can see positive results from foreign capital inflows into the stock market, pushing the index to around 1,500 points. But the government still prioritises foreign direct investment (FDI) and public investment as number one, because these are investments that build long-term sustainable growth potential,” he said.

On concerns that competition with India could divert FDI in automotive and printed circuit boards (PCB), Ekniti said competition is normal, but Thailand’s policy focuses on being a “partner” by connecting supply chains with India, which is a large market.

Aim to close South Korea and EU FTAs this year

Suphajee Suthumpun, Minister of Commerce, said FTA negotiations must continue. She said Thailand will accelerate implementation of the FTAs with Sri Lanka and the European Free Trade Association (EFTA), which were previously signed, and will prepare proposals for Cabinet and Parliament approval.

For 2026, she said the goal is to conclude FTA negotiations with South Korea and the EU, as well as complete ASEAN–Canada cooperation within the year. She added there is a plan to review existing FTAs to include modern issues such as digital trade, and to encourage the private sector to make greater use of FTA benefits, as utilisation is not yet at 100% even for concluded FTAs.

Srettha warns about conditions in the new tariff regime

Srettha Thavisin, former Prime Minister, said Trump’s idea of imposing near-uniform tariff rates on all countries must be considered carefully. If the new tariff rate is 10–15%, it is still lower than the previous baseline of around 19% used for negotiations. However, he said the key lies in the “conditions and exemptions”, which could immediately change the competitive equation in the region. Thailand must therefore closely track developments and prepare a proactive strategy rather than waiting to absorb the impact.

He identified five major risks to Thailand’s economy this year:

• Persistent household debt, weighing on domestic purchasing power
• Slow business procedures, despite Thailand being a key investment target
• A property slowdown due to interest rates and high loan rejection rates
• Global economic volatility, especially US trade policy
• Domestic political stability, requiring policy continuity
• Negotiating team urged to understand competitors

Uthai Uthaisangsuk, president of Sansiri Plc, said Trump tariffs signal the global trade war is not over. Thailand needs a negotiating team that understands comparative impacts versus competitor countries to protect long-term competitiveness.

Asst Prof Dr Kessara Thanyalakpark, managing director of Sena Development Plc, said Thailand’s economy is full of uncertainty, especially spillovers from tariff policy and trade retaliation between major powers such as the United States and China, which directly affect Thailand’s production chains and exports.

Buranin Rattanasombat, of the Marketing Association of Thailand (MAT), said Trump tariffs are homework for the government team to closely monitor. The US Supreme Court decision overturning Trump’s tariffs reflects uncertainty that could hit Thai trade. Thailand cannot rely on the US market alone and must adapt by finding new markets and regions, while also strengthening the domestic market.

He added: “A positive aspect of 2026 is having the same government continuing work, with the Bhumjaithai Party as the core party. The capital market has responded well, improving confidence. But Thailand still has longstanding problems and must adjust by raising efficiency, creating new things, and developing infrastructure for long-term economic growth.”