Pichai confident of reducing US reciprocal tariff before August 1 deadline

He made this statement following the US's dispatch of a letter regarding its decision to impose a 36% reciprocal tariff on Thai export goods, which was sent on the night of July 7.

Pichai stated that he was somewhat shocked by the US's move, but he believes that the letter issued prior to the deadline for suspending the tariff measures (90 days) on July 9 indicates that the US aims to intensify the negotiations. 

"The US expects negotiations to become more robust, which is why it sent letters to various countries as previously announced. However, I am confident that the US will announce a reduction of the tariff on Thailand to below 36%, and we still have 20 days left to negotiate before the August 1 deadline," Pichai said.

He speculated that the proposal Thailand submitted on July 6 might not have been fully concluded, suggesting that the US could combine Thailand's previous offer with the new proposal and consider them together. This could potentially lead to a reduction in the tariff the US plans to impose on Thailand.

On the night of July 7, Pichai assigned Thai officials stationed in the US to monitor the progress of the new proposal. The US indicated that it was rushing to review Thailand's offer, as many other countries are also in the process of trade negotiations, he added.

Pichai continued by saying that the latest revision of the proposal followed negotiations with the United States Trade Representative (USTR). He believes that what the US will consider next is based on the changes they have noted.

He said that the proposal Thailand submitted is quite substantial—Thailand has agreed to reduce import duties on over 90% of US goods, with some items having a tax rate reduced to 0%.

“However, there are around 10% of items we cannot reduce, as we need to protect domestic businesses and ensure that tax measures do not adversely affect goods from countries with which Thailand has free trade agreements (FTAs), which are also important export markets," he explained.

Pichai also noted that Thailand must adjust its economic structure moving forward, stating that countries relying heavily on exports will face problems, and Thailand is no exception.

“At the same time, we must increase reliance on the domestic economy, strengthen agriculture, and most importantly, one of the key economic drivers left in Thailand is tourism, which needs a major overhaul, including increasing confidence in the tourism sector," he said.

Deal to lower US tariffs below 36% before August 1

Pichai told the press at Government House in Bangkok that over 10 countries have been notified by the US about tariff hikes, with a message urging these countries to accelerate negotiations before August 1. This is because negotiations require time.

He explained that the tariff rates announced would remain unchanged if they have already been negotiated or if the rates are deemed appropriate. For countries with tariff rates exceeding 40%, these will be reduced to 40%.

Additionally, countries with unchanged rates and those that have already submitted proposals, such as South Korea and Japan, will be adjusted into the new group, he said, adding that Thailand needs to work harder during this period.

Pichai is confident that the new proposal sent earlier has been received by the relevant US parties. He said the reason for the announcement of the tariff hike is that, without it, negotiations could not proceed.

He believes that the tariff rates will place Thailand in the same competitive tier as its trade partners, allowing the country to remain competitive in exports.

He added that the new proposal submitted by Thailand includes a wide range of items, which will already be included in the free trade agreement (FTA) at a 0% tariff rate.

When asked about the expected tariff rate, Pichai stated that it should be competitive. He explained that any product exported in the same way as other countries' products should fall into the same category. 

He elaborated that Thailand had not requested a reduction in the tariff rate from 36%, but rather, the focus was on negotiating how cooperation could take place.

“As for the appearance of the products we import, the US has taken this into consideration and is working with us. Once it is concluded, they will respond, and the rate will likely not be the same for all goods. It may vary according to the type of product,” he said.

When asked whether Thailand’s involvement in BRICS would pose any problems, Pichai said that Thailand is a partner, primarily there to learn and observe. Given the significant changes in the world today, he said, Thailand should strive to remain engaged with all parties.

He stressed that Thailand cannot set a timeline for when the US will respond to its proposal.

"However, if the US does not consider our proposal and Thailand is subjected to a 36% tariff, we do not yet know. But we confirm that our proposal is a good and transparent one. It is important to consider that many stakeholders are involved, so we need to ensure that everyone understands and accepts it,” he said.

Pichai denied claims that the Thai government had been slow in its approach to the US tariff negotiations, saying that relevant agencies had worked diligently for over a month and had not merely discussed the issue, but gone into detail about specific items.

He also confirmed that the government has a backup plan for this issue, whether the tariff rate is 36% or lower, as global trade requires adjustments. He added that plans to support affected businesses are already in place.

Although there is no agreement yet, exports may slow, and some businesses may be impacted, he said.

When asked whether the remaining economic stimulus funds would be used to support businesses, Pichai said that the necessity and appropriateness of such action would need to be assessed. Other financial sources, such as the money and capital markets, could also be tapped for assistance.

"I am confident that Thailand’s proposal will receive positive feedback because it is well explained, measurable, and actionable. It produces ongoing results, not just promises,” he said.

When asked whether a fund would be established to assist businesses, Pichai said that data has already been collected. Each business may have different access to funding, so it might not necessarily be through a specific fund but could vary depending on the type of assistance required.

When asked whether news of the tariff hike had affected confidence, particularly in the stock market, he said that this sentiment was shared by all US trading partners. However, he believed that significant efforts and export factors would help resolve the situation.

When asked what tariff rate would be suitable for Thailand to remain competitive, Pichai replied that it depends on who Thailand is competing with and what tariff rates those countries have. As for Vietnam, it concerns specific types of products.

When asked when he would fly to the US to negotiate again, Pichai replied, "Not anytime soon. We will be meeting every day from now on," before heading to the government building.