Thailand Rejects Full Tariff Liberalisation for US Imports
Bangkok has reiterated it will not offer the United States zero per cent tariffs across all product categories, as it awaits a crucial response ahead of an August deadline for reciprocal customs duties
- Thailand has refused to accept zero per cent tariffs on all US imports, citing the need to protect its domestic businesses and agricultural sector.
- If a mutually beneficial agreement is not reached by the August 1, 2025 deadline, Thailand's current tariff rate could remain at a high 36%, making it less competitive than its ASEAN neighbors.
- The rejection is also based on the Most-Favoured Nation (MFN) principle, as a zero-tariff deal with the US would force Thailand to offer the same terms to all its other Free Trade Agreement partners, risking significant economic harm.
Thailand has strongly affirmed its position that it will not concede to zero per cent tariffs on all US imports, citing the vital need to protect its agricultural sector and domestic businesses as negotiations for reciprocal customs duties approach an August 1, 2025 deadline.
Should a satisfactory agreement not be reached in time, Thailand faces the prospect of its tariff rate remaining at 36 per cent, a figure significantly higher than that of its regional competitors within ASEAN.
The "Thailand Team" recently engaged in its second round of negotiations with the Office of the United States Trade Representative (USTR) via teleconference on 17 July 2025.
During this session, Thailand submitted an updated proposal and is now awaiting Washington's response. The Thai government is hopeful that the outcome will see its tariffs reduced to a level competitive with other nations in Southeast Asia.
Deputy Prime Minister and Finance Minister Pichai Chunhavajira revealed that the reciprocal tariff discussions with the US are progressing at an operational level, with minor figure adjustments currently under review following the submission of Thailand’s additional offer.
The scheduling of the next negotiation round will hinge on the US response.
Concurrently, Deputy Finance Minister Julapun Amornvivat underscored Thailand’s unwavering negotiation strategy, stating that the country would not accept a proposal that fully opens its market to all US imports, unlike some other nations that have concluded agreements with Washington.
This stance stems from profound concerns over potential adverse economic impacts.
Julapun cited Vietnam as an example, which secured a 20 per cent tariff on its exports to the US whilst agreeing to zero per cent on imports from the US.
However, he warned that such agreements often necessitate broader market liberalisation due to Most-Favoured Nation (MFN) principles, compelling a country to extend similar concessions to all its Free Trade Agreement (FTA) partners.
"Many items within our FTAs are subject to import restrictions to safeguard Thai businesses and farmers," Julapun explained. "If we agree to a 0% tariff for one country, we would be obliged to extend it to other trading partners with whom Thailand has trade agreements. This would lead to a 'dam breaking,' causing significant damage to domestic businesses, particularly sensitive agricultural products."
He stressed that the tariff negotiations are founded on the principle of mutual benefit. "If only one side gains all the benefits, an agreement cannot be reached," he asserted.
"We need a little time for the US to consider our proposal and respond with where they finally stand. But we insist that any new agreement must be balanced, and Thai businesses, especially vulnerable sectors like agriculture, must be able to survive," Julapun added.
He clarified that Thailand's new proposal, which seemingly offers the US 0% import tariffs on "tens of thousands of items," refers to customs tariff codes rather than a vast number of actual product categories, advising against undue alarm over the figure.
Julapun concluded by emphasising the inevitability of shifts in global trade patterns, regardless of future US presidential changes.
He urged the private sector to adapt, with the government committed to providing initial support, including soft loans totalling 200 billion baht, to help affected businesses continue operations and maintain employment.
Furthermore, Thailand must diversify its export markets, reduce reliance on any single nation, and closely monitor evolving global trade dynamics, as crises can often present new opportunities.
Domestically, there is a renewed focus on local investment and scrutinising whether products benefiting from privileges genuinely meet local content requirements.
