Inside the Thailand Tariff Deal: Unraveling the Chaos, Shockwaves, and Negotiation Strategies

When US President Donald Trump announced hefty tariffs on April 2, it sent shockwaves through Southeast Asia. This region’s economy is heavily reliant on exports, making the news especially alarming. The tariffs soared as high as 49% for some countries, impacting industries like electronics in Thailand and Vietnam, and clothing factories in Cambodia.

Richard Han, CEO of Hana Microelectronics, recalls the moment vividly. He was stunned to see Trump announce a 36% tariff on Thailand. Fortunately, Thailand secured a deal to lower that rate to 19%, but only after tense negotiations leading up to Trump’s deadline.

In 2024, the ten ASEAN countries exported $477 billion worth of goods to the US. Vietnam, the most vulnerable, sent $137 billion worth, accounting for nearly a third of its GDP. This urgency pushed Vietnam to negotiate quickly, leading to an agreement that reduced its tariff to 20%. However, there are no clear details, and government officials have yet to confirm the terms.

Countries like Indonesia and the Philippines also jumped on the bandwagon, achieving similar deals, despite lesser reliance on US exports. Thailand, which raked in over $63 billion in exports to the US last year, needed to act quickly but faced political hurdles. Decisions taken independently of trade issues had angered US officials, which contributed to delays in negotiations.

Unlike Vietnam, Thailand’s complex political landscape slowed down its responsiveness. The current coalition government had to balance business interests and public sentiment, which made swift negotiations harder. Additionally, past actions—like sending Uyghur asylum-seekers back to China—had left a sour taste in US officials’ mouths.

In negotiations, the US demanded access to Thailand’s agricultural market, which is highly protected. This posed a significant challenge since Thai agribusinesses, like CP Group, dominate the sector. Opening up to US competition could threaten local farmers, as pointed out by Worawut Siripun, a pork producer who fears he can’t compete with larger US farms.

Meanwhile, Thailand’s manufacturers, who contribute more significantly to the GDP than agriculture, were desperate for a favorable deal. Suparp Suwanpimolkul from SK Polymer emphasized the necessity of a deal, as their operations rely heavily on exports to the US. Uncertainty about tariffs negatively impacted business planning.

Electronics manufacturers also expressed relief at the tariff reductions. Han argued a 20% tariff would feel like a mere tax for US consumers, ensuring continued demand for products from the region. However, concerns around trans-shipment—where goods are rerouted through Vietnam to avoid tariffs—remain pressing. This could lead to strict identification criteria regarding local content.

Despite Mr. Han’s worries, many Thai businesses, like SVI, are already intricately tied to a global supply chain involving parts from places like China and Malaysia. The complex network of suppliers makes rearranging the supply chain to meet US demands challenging.

Thailand’s late start in negotiations and the difficulty of meeting US demands mean that getting a deal, any deal, is a relief. As they face the ongoing unpredictability of Trump’s tariff policies, companies are left wondering about the future framework for trading. The uncertainty continues to sow confusion and speculation about how to adjust to the evolving economic landscape.

In a world where trade rules are constantly shifting, businesses can only hope for consistency. As Richard Han puts it succinctly, “At some point, this has to stop.” Such insights reflect the changing dynamics in global trade, where Southeast Asia finds itself at a crossroads.



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