Thaksin advises Thailand to handle Trump’s trade taxes with caution, focus on strategic negotiations

Former Prime Minister Thaksin Shinawatra on Wednesday shared his insights on how Thailand should approach US trade tariffs during the 55 Years Nation Exclusive Talk: Breaking Through Thailand's Crisis Chapter 1, held at the Eastin Grand Phayathai Hotel. The event was moderated by three Nation Group editors-in-chief.

Thaksin discussed the “Art of the Deal” strategy, which he said is typical of Donald Trump, emphasising the business-minded approach behind Trump’s negotiation style. He noted that Trump’s strategy, which involves maximum pressure, is designed to corner the opposing party before any real negotiations begin.

“Trump’s method is a business strategy — he sets the highest demands first, which may seem extreme, but that doesn’t mean it’s final. Negotiations can still happen,” Thaksin explained.

Thaksin cautioned that despite the pressure and tight deadlines, rushing into concessions would be disastrous for Thailand, likening it to being “taken advantage of for free”. This could leave Thailand at a significant disadvantage.

Breaking Down Thailand’s Export Structure to the US

Thaksin also analysed Thailand’s export structure to the United States, identifying three key categories of exports that will be impacted by the tariff increases, each requiring a different strategy:

1. Products manufactured by US companies in Thailand:

• These products account for one-third of Thailand’s exports to the US. They are produced by US companies that have set up manufacturing bases in Thailand or outsource production here.
• If tariffs are increased, the added cost would likely be passed on to American consumers, but relocating production from Thailand would be difficult due to the skilled Thai workforce built over decades.
• Therefore, American companies are more likely to absorb the increased costs rather than move operations.

2. Products using Chinese parts assembled in Thailand:

• The US has focused on these goods, accusing Thailand of “origin-shifting” to avoid Chinese tariffs.
• Thaksin suggested that if these exports are affected, Thailand could lose revenue but benefit from reduced imports of Chinese parts, which would also help narrow Thailand’s trade deficit with China.
• As a result, the impact on Thailand’s overall trade balance might not be as severe.

3. 100% Thai products (SMEs and agriculture):

• This segment is the most concerning and requires the strongest protection. It includes SMEs and agricultural products from Thailand.
• Any tariffs imposed on these products would hit producers and farmers hard, as they are the most vulnerable to changes in trade conditions.

Thaksin concluded that while Thailand is facing significant challenges in trade negotiations, it is crucial to protect the most vulnerable sectors while strategically navigating the US tariffs. He stressed that Thailand must reassess its approach and remain vigilant to avoid long-term economic damage.

 

Turning the Tables with "Digital Services" That Have Never Been Taxed

In the ongoing negotiations, Thaksin has proposed that Thailand use the issue of the “services sector” — particularly services exported by the United States to Thailand — as a tool to balance trade relations.

Thaksin explained that, in the past, Thailand may have only considered the “tangible goods” aspect. However, in reality, Thailand imports a significant amount of services from the United States, especially in digital platforms and streaming services, many of which have never been taxed systematically.

"You sell products to us, we tax you, but you sell us a lot of services… These platforms, they’re not taxed,” he said.

This proposal is not a confrontation but a call for “fairness” in trade relations, ensuring both sides take on their responsibilities in a balanced way. This is a tactic that Thailand’s Ministry of Finance and relevant agencies need to adopt in order to strengthen their bargaining power.

Geopolitical Dimensions: Security at Stake Behind Trump’s Tariff Wall

The most concerning aspect of Thaksin’s analysis is his warning that US demands go beyond economics and delve into geopolitics. The US wants Thailand to take a clear stance against China, in exchange for tax benefits.

"It’s also about Geopolitics... What they want to see is how far we are distancing ourselves from China."

Thaksin firmly stated that Thailand must prioritise national security in making this decision. Yielding to certain demands unrelated to economics could “bring war to our doorstep,” something he believes is unacceptable.

"I’m afraid we’ll end up like Ukraine. No, I won’t have that," said the former Prime Minister, hinting at possible US demands related to using military bases in Thailand, a boundary that Thailand must clearly define to avoid becoming a playing field for superpowers.

The heart of Thaksin’s analysis is a plea for calm. He urged all parties not to panic, as panic often leads to wrong decisions and a loss of rationality.

Thaksin expressed confidence that Thailand's negotiating team is on the right track but emphasised the need for greater attention to detail and close cooperation.

"We can only choose what is possible... I’m still here," Thaksin concluded with assurance.