ANALYSIS - Thailand holds its breath

US tariff deal with Vietnam sets a benchmark, as Thai officials hope for similar or better conditions, write Nareerat Wiriyapong, Ranjana Wangvipula and Phusadee Arunmas

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The Thai business sector remains optimistic that tariff negotiations with the US can yield a favourable outcome after Vietnam recently made headlines by securing a 20% tariff rate on shipments to the US along with a waiver on import duties for American products.

Thailand is part of a group of key trading partners, including Japan, the European Union (EU) and South Korea, still awaiting final decisions ahead of a July 9 deadline US President Donald Trump imposed back in April for negotiations.

Under the terms of the US-Vietnam tariff agreement, Washington is imposing a 40% levy on goods that originate from third countries but are routed through Vietnam, a measure widely seen as curbing Chinese efforts to bypass tariffs.

Economists say Thailand may have a competitive edge in its negotiations with the US, as it already enforces mechanisms to prevent such practices.

TRUMP'S REAL TARGET

Nattapol Kamthakrua, director of securities analysis at Yuanta Securities (Thailand), said Trump's real intention with reciprocal tariffs seems to be blocking China's growth and isolating the mainland.

"That's why I believe Thailand holds a competitive advantage when compared with Vietnam because Thailand was among the first countries in the world to introduce measures to prevent China from using our country to obtain a preferred tariff rate for exports to the US," he said.

Vietnam did not impose such measures to obstruct Beijing from using the country's low manufacturing capability for exports, said Mr Nattapol.

In addition, Thailand's trade surplus with the US is lower than that of Vietnam, he said.

Mr Nattapol said S-curve industries may consider investment in Vietnam instead of Thailand given that nation's competitive labour costs. Yet Thailand still holds a competitive advantage in terms of infrastructure development.