Thailand Secures 19% US Tariff Deal, Boosting Competitive Edge Over Regional Rivals
Deputy finance minister says successful negotiations give Thailand significant advantage over competitors, with GDP growth projections expected to rise
- Thailand has successfully negotiated a 19% reciprocal tariff rate with the United States.
- The new tariff provides Thailand with a competitive advantage over regional rivals, with rates now considered slightly better than Vietnam's.
- This edge is strengthened by Thailand's high domestic production ratio, as the agreement's rules penalize countries with lower local content.
- The deal is expected to attract increased foreign investment and has already led to upward revisions of Thailand's GDP growth forecasts.
Thailand has successfully negotiated a 19% tariff rate with the United States, giving the kingdom a competitive advantage over regional rivals and positioning it to attract increased foreign investment, according to Deputy Finance Minister Paopoom Rojanasakul.
The breakthrough agreement, secured after intensive negotiations led by Deputy Prime Minister and Finance Minister Pichai Chunhavajira alongside relevant government agencies, establishes Thailand's tariff structure at two key rates: a 19% reciprocal tariff and a 40% rate for transshipment goods.
"The entire team worked extraordinarily hard with frequent negotiations to reach this point," Paopoom said. "The results mean Thailand's tariff rates are now comparable to other trading partners and slightly better than Vietnam in terms of trade tariffs, bringing everyone back to a level playing field."
Competitive Manufacturing Advantage
The deputy minister highlighted Thailand's significant advantage stemming from its high domestic production ratio and extensive in-country supply chain connections.
Under new regulations, countries with lower domestic production face higher tariffs, placing Thailand in a favourable position compared to competitors like Vietnam.
"Thai-manufactured goods will face tariffs of just 19%, giving Thailand a meaningful comparative advantage against our trading partners," Paopoom explained. "This creates greater opportunities to attract foreign investment."
The agreement's emphasis on Regional Value Content (RVC) requirements—determining the proportion of domestic production value—serves as a crucial differentiator. Thailand's ongoing development strategy focuses on increasing local content and domestic production to maintain this competitive edge.
Economic Growth Projections Revised Upward
Following the successful negotiations, Thailand's GDP growth forecasts for 2025 are expected to improve. The Fiscal Policy Office has already revised its projection from 2.1% to 2.2%, whilst the International Monetary Fund increased its forecast from 1.8% to 2.0%.
"We expect the Fiscal Policy Office and other agencies to announce further upward GDP revisions in the coming period," Paopoom said. "The concerns about tariffs have returned to normal levels, and the positive outcomes give Thailand a higher competitive advantage."
The minister expressed confidence that second-quarter 2025 GDP figures, to be announced by the National Economic and Social Development Council, would show strong performance.
Support Measures for Exporters
The government is preparing comprehensive support measures for affected businesses, particularly exporters.
A soft loan programme will be presented to the Cabinet shortly, whilst immediate assistance is already available through the Export-Import Bank of Thailand (EXIM Bank).
EXIM Bank has implemented debt moratoriums, debt restructuring, payment deferrals of up to 365 days, and interest rate reductions of approximately 20% for affected exporters.
The bank has also increased credit facilities for working capital and expanded trade exhibition financing with export guarantee schemes to encourage market diversification.
Economic Stimulus Deployment
Regarding economic stimulus measures, Paopoom confirmed that 42 billion baht remains available from the 157 billion baht central budget allocation for economic stimulation.
The government maintains flexibility to adjust measures according to prevailing circumstances.
"All sectors continue to face some impact, though less than initially projected. Everyone still has increased burdens and constraints, so it remains the government's responsibility to provide ongoing support," he concluded.
The remaining funds from the competitiveness enhancement fund and economic stimulus budget await final decisions and further consideration as the government evaluates the most appropriate deployment strategies.
