Thailand Offers US More Trade Concessions to Avert 36% Levy

Key Points

• It seems likely that Thailand is offering more trade concessions to the United States to avoid a potential 36% tariff on its exports.

• The evidence leans toward these concessions including greater market access for US goods, increased purchases of US energy and Boeing jets, and waiving import duties for most goods.

• There is controversy, as the negotiations involve significant tariff threats and economic implications for both nations, with potential impacts on Thailand's economic growth if unsuccessful.

Background

Thailand is engaged in trade negotiations with the US to reduce its trade surplus and avoid steep tariff hikes, with a focus on boosting bilateral trade and addressing trade imbalances.

Details of Concessions

Thailand's revised proposal includes:

• Greater market access for US farm and industrial goods.

• Increased purchases of US LNG (up to 2 million tonnes annually over 20 years from an Alaskan project) and up to 80 Boeing aircraft over the next few years.

• Waiving import duties or non-tariff barriers for most goods immediately, with gradual removal of remaining restrictions.

Trade Surplus Reduction

Thailand aims to reduce its $46 billion trade surplus with the US by 70% within five years, with a goal to achieve a trade balance in seven to eight years.

Tariff Negotiation

Thailand is pushing for a 10% tariff rate, with an acceptable range of 10-20%, to replace the potential 36% levy.

Deadline and Implications

The revised offer must be submitted before July 9, 2025, when a 90-day pause capping tariffs at 10% expires. If unsuccessful, there could be a 1% drop in Thailand's national economic growth due to reduced export volumes.

Supporting URLs:

• Bloomberg: Thailand Offers US More Trade Concessions to Avert 36% Levy

• Economic Times: Thailand to Offer US More Trade Concessions to Avert 36% Tariff

• Nation Thailand: Thailand to Offer US More Trade Concessions to Avert 36% Tariff

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Comprehensive Analysis of Thailand’s Trade Concessions to the United States to Avert a 36% Tariff

This note provides a detailed examination of Thailand’s recent offer of additional trade concessions to the United States, announced on July 7, 2025, aimed at avoiding a potential 36% tariff on its exports. The analysis is informed by recent news reports from reputable sources, ensuring a thorough understanding for professional colleagues.

Event Overview

On July 7, 2025, Thailand submitted a revised trade proposal to the United States, seeking to boost bilateral trade volume and reduce its significant trade surplus to avert a threatened 36% tariff. This development follows a 90-day pause, during which tariffs were capped at 10%, set to expire on July 9, 2025. The proposal is part of ongoing negotiations to conclude a trade agreement, with Thailand among several countries racing to avoid steep tariff hikes.

Details of Trade Concessions

Thailand’s revised offer includes several specific concessions designed to enhance market access for US goods and increase purchases of American products. These include:

• Greater Market Access: Thailand proposes to provide increased access for US farm and industrial goods, facilitating easier entry into its market.

• Increased Purchases of US Products: The proposal includes commitments to purchase up to 2 million tonnes of US liquefied natural gas (LNG) annually over 20 years from an Alaskan project, as well as acquiring up to 80 Boeing aircraft over the next few years. Additionally, Thai companies such as SCG Chemicals Plc and PTT Global Chemical Plc are expected to increase ethanol imports from the US.

• Duty and Barrier Waivers: Thailand plans to immediately waive import duties or non-tariff barriers for most goods, with a gradual removal of remaining restrictions on fewer items. It is noted that these measures are unlikely to affect Thai farmers or local producers, as the goods in question are items Thailand cannot produce sufficiently, such as certain industrial and energy products.

Concession Type	Details
Market Access	Increased access for US farm and industrial goods
Product Purchases	Up to 2M tonnes LNG annually over 20 years (Alaskan project), 80 Boeing jets, increased ethanol imports
Tariff/Barrier Adjustments	Immediate waiver of duties/non-tariff barriers for most goods, gradual removal of remaining restrictions

Trade Surplus Reduction Target

A central component of Thailand’s proposal is to address its substantial trade surplus with the US, currently at $46 billion. The target is to reduce this surplus by 70% within five years, with an ambition to achieve a trade balance in seven to eight years. This is a more aggressive timeline compared to an earlier proposal, which aimed to wipe out the gap in ten years, reflecting Thailand’s urgency to secure favorable terms.

Tariff Negotiation and Deadline

Thailand is pushing for a tariff rate of 10%, with an acceptable range of 10-20%, significantly lower than the 36% levy threatened by the US. The revised offer must be submitted before July 9, 2025, when the 90-day pause capping tariffs at 10% expires. Failure to reach an agreement by this date could result in the imposition of the higher tariff, with potential economic repercussions for Thailand.

Economic Implications

The negotiations carry significant economic stakes for Thailand. If the trade deal fails, there is a projected 1% drop in Thailand’s national economic growth due to declined export volumes, given the importance of the US market for Thai exports. This underscores the urgency of the revised proposal and the potential impact on Thailand’s economic stability.

Comparative Context

The situation is contextualized by similar negotiations, such as Vietnam, which finalized a trade deal with the US after facing tariff threats of 20% on general goods and 40% on routed products. This comparative reference highlights the competitive landscape and the strategic importance of concluding agreements to maintain favorable trade terms.

Key Figures and Statements

Finance Minister and Deputy Prime Minister Pichai Chunhavajira has been a key figure in these negotiations, emphasizing the need to boost bilateral trade and reduce the trade surplus. His leadership has been instrumental in formulating the revised proposal, with statements reflecting Thailand’s commitment to finding a mutually beneficial solution.

Market and Economic Context

The trade dispute reflects broader geopolitical and economic tensions, with the US seeking to address trade imbalances and protect domestic industries through tariff threats. Thailand’s concessions are designed to align with US interests while minimizing domestic economic disruption, particularly for sectors reliant on exports. The involvement of major US companies like Boeing and energy exporters highlights the potential for significant bilateral trade growth if the deal is successful.

Conclusion

In summary, Thailand’s offer of more trade concessions to the United States, announced on July 7, 2025, includes greater market access for US goods, increased purchases of US energy and aircraft, and tariff adjustments to reduce its $46 billion trade surplus by 70% within five years. The proposal must be finalized before July 9, 2025, to avoid a 36% tariff, with potential economic implications for Thailand’s growth if unsuccessful. This development underscores the complexity of international trade negotiations and the strategic importance of maintaining favorable trade relations.

Supporting URLs:

• Bloomberg: Thailand Offers US More Trade Concessions to Avert 36% Levy

• Economic Times: Thailand to Offer US More Trade Concessions to Avert 36% Tariff

• Nation Thailand: Thailand to Offer US More Trade Concessions to Avert 36% Tariff

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