TARIFF TIGHTROPE

A 36% tax on imported Thai goods by the US necessitates diversification of export markets and internal economic reform

- STORY: SUWITCHA CHAIYONG

In an official letter dated July 7, the United States called for a 36% import tariff on all goods from Thailand, which took effect yesterday.

The letter cited the need to address the trade imbalance between the two countries and warned that attempts to route goods through third countries to avoid tariffs would result in additional penalties.

While Thailand still plans to negotiate the tariff stipulations, several Asean countries have already settled their negotiations. Vietnam will be charged a 20% tariff on export products while Indonesian exports to the US will be charged 19%.

To discuss the issues of tariffs, Kasetsart University organised the forum "Where Is Thailand's Trade Survival In The Era Of President Trump's Tariffs".

Pornchai Prapavong, of the Department of International Trade Negotiations, said the US constitutes a quarter of the global economy and is the world's largest consumer market. However, the US has a trade deficit of US$1.2 trillion. It has the largest deficit with China and India, combined at 28%, and with Canada and Mexico, combined at 20%. As a result, the US tariff policy aims to protect its interests, address perceived unfair trade practices and reduce trade deficits.

Asst Prof Suwanna Sayruamyat, a lecturer at the Faculty of Economics, Kasetsart University, pointed out that the 36% tariff on Thai exports will reduce the value of exported goods by 7.8 billion baht. Additionally, Thailand's agricultural products such as rubber and rice will be affected.

"Thailand is one of the world's rubber leading producers. Rubber is exported to the US in large quantities at a high value (27.4% of Thailand's total market). However, customers can switch to purchase products from competitors such as Vietnam, Indonesia and Malaysia," said Asst Prof Suwanna.