Thailand
Thailand's Exports Face U.S. Tariff Increase: Key Insights
The U.S. has raised tariffs on Thai imports to 12.5%, but over 2,120 product categories are exempt, according to government officials.
On July 24, 2023, the U.S. increased tariffs on Thai imports from 10% to 12.5% under Section 301 of the Trade Act, marking a net increase of 2.5 percentage points. This adjustment affects a broad range of products, but the Thai government has clarified that more than 2,120 items are exempt from these tariffs, including crucial exports like integrated circuits, natural rubber, and tapioca starch. This exemption accounts for over half of Thailand's total export value to the U.S., as reported by the Deputy Spokesperson for the Prime Minister's Office, Lallida Periwitthana.
Officials indicated that the new tariff rate is at a similar level to those imposed on competitors such as China, Vietnam, and the Philippines, suggesting that it may not significantly impact Thailand's competitive edge in the U.S. market. Lallida noted that exporters, particularly small and medium-sized enterprises (SMEs), should evaluate the implications on a product-by-product basis rather than reacting solely to the overall tariff increase.
Despite the exemptions, the government acknowledges that the effects of the tariff hike will vary among businesses, depending on product classification, supply chain dynamics, and U.S. import conditions. Therefore, it is crucial for exporters to remain informed about specific tariff codes and their respective impacts.
In response to these developments, the Thai government is actively negotiating an Agreement on Reciprocal Trade (ART) with the U.S. to safeguard the interests of Thai exporters and enhance competitiveness in the long term. The timeline for these negotiations has not been specified, but the government is committed to addressing the concerns of affected industries.
Additionally, the government is monitoring a U.S. investigation into structural excess capacity, which could further influence trade conditions. This inquiry, initiated by the U.S. Trade Representative (USTR) in March 2023, involves multiple countries, including Thailand, and may lead to additional trade measures.
The Thai government is working closely with relevant agencies to gather data on production, exports, and supply chains to effectively communicate with U.S. authorities and protect national interests. Lallida stated that the government aims to provide clear communication regarding existing measures and ongoing negotiations, ensuring that exporters are supported based on actual impacts.
As Thailand navigates this complex trade landscape, the focus remains on maintaining access to the U.S. market while exploring alternative markets and enhancing the competitiveness of Thai products.