The upcoming US tariffs are expected to have worldwide consequences and affect multiple countries unless negotiations for more favorable terms are reached before August 1.
The United States plans to implement a 36% reciprocal tariff on Thai goods, which could weaken the competitiveness of Thai products in the US market, especially when compared to rivals like Vietnam.
Aat Pisanwanich, an international economics analyst and ASEAN affairs advisor at Intelligence Research Consultant, recently examined the policy’s implications, its potential impact, and outlined strategic actions Thailand should consider moving forward.
Main Objectives of the US Tariffs
The primary aim of the US tariffs is to reduce trade deficits with its trading partners.
Last year, the US experienced a global trade deficit of US$1.2 trillion.
Additionally, the government seeks to boost revenue from these increased tariffs to offset declines in corporate and individual income taxes.
The revenue generated from these tariffs is expected to support military expenditures and immigration management under the “One Big Beautiful Bill Act” (2025).
For the 2025 fiscal year, tariff revenues are projected to reach $100 billion, assuming a universal tariff rate of 10%.
If reciprocal tariffs are introduced on August 1, the US could see increased tariff income and potentially attract more investments back to the country.
Principles Behind the US Tariffs
The US has imposed new tariffs, often called the “Trump Tariffs,” on nearly all countries due to persistent and substantial trade deficits. These tariffs are categorized into two main types:
- Universal Tariffs: A 10% baseline tariff on all US imports, regardless of whether the US has a trade surplus or deficit with the importing country. These tariffs have been in effect since April 5.
- Reciprocal Tariffs: Starting August 1, these are calculated based on the trade data from 2024:Import Tariff Rate (%) = (US trade deficit with a country ÷ US imports from that country) × 100 ÷ 2
For example, Thailand’s trade deficit with the US in 2024 was $45 billion, while US imports from Thailand totaled $63 billion. Applying the formula:
(45 ÷ 63) × 100 ≈ 71.4%; divided by 2 equals about 35.7%, resulting in an approximate tariff of 36%.
In addition, the US has implemented product-specific tariffs through various legislation.
Under Section 232, which addresses national security concerns, the Department of Commerce can impose tariffs such as a 25% levy on imports of steel, aluminum, and auto parts. It also plans to add a 50% tariff on copper and a 200% tariff on pharmaceuticals.
The Tariff Act of 1930 authorizes some extremely high tariffs, such as over 3,000% on solar panels from Cambodia and more than 300% on those from Thailand.
Furthermore, the US has utilized Section 301 to impose tariffs across a broad range of Chinese goods.
Credit: Bangkok Post
Starting August 1, the US will implement reciprocal tariffs on imports from various countries, in addition to a universal 10% tariff on all imported goods. The specific rates for each country will vary, and if bilateral agreements are not reached before the deadline, these tariffs will come into effect (as detailed in the accompanying graphic).
Aat Pisanwanich explained the possible effects of these reciprocal tariffs on exports. For example, Product A from Thailand, previously priced at $100, will increase to $136 in the US market after August 1. Meanwhile, Product A from Vietnam, also costing $100 previously, will see its price rise to $120, making it $16 cheaper than the Thai equivalent.
Will any Thai industries benefit from the US tariff measures?
The introduction of a 36% reciprocal tariff is unlikely to favor any Thai industries, and its impact will differ across sectors. Last year, Thailand’s total exports to the US were roughly $63 billion, comprising 85% industrial goods and 15% agricultural products. About 30% of industrial exports are handled by small and medium-sized enterprises (SMEs), with larger domestic and foreign exporters accounting for the remaining share.
Aat noted that SMEs are likely to be most heavily affected due to higher tariffs, increased competitiveness challenges, and limited working capital. Additionally, these businesses face stiff competition from the influx of Chinese products in Thailand’s market.
Which industries are expected to be negatively impacted?
Based on Thailand’s trade surplus with the US last year, Aat identified several key sectors that could suffer from the new tariffs. These include communication and telecommunication equipment; computers and data processing systems; machinery parts; car tires; electronic equipment and semiconductors; electric transformers and power supply devices; motors and engines; rubber products; and electrical appliances.
Agricultural exports such as rice and rice-based products; fresh and dried fruits; fruit and vegetable juices; and fresh or processed vegetables are also likely to be affected.
How will Thai consumers be impacted by the US tariffs?
Aat cautioned that Thai consumers might face income reductions due to declining exports, which could significantly slow economic growth. While household expenses may not rise immediately, the increased cost of living could become burdensome. There is also a heightened risk of job losses, business failures, and rising household debt levels.
What measures should the government adopt to support impacted industries?
Aat suggested that the government needs to increase and allocate funds toward economic stimulus efforts. Without such measures, Thailand’s growth could fall below 1% or even experience contraction.
Support for farmers and SMEs is vital and could involve tax exemptions, the creation of compensation funds, exploring alternative markets, subsidizing production costs, and providing low-interest loans.
How are other countries helping their affected businesses and populations?
Aat highlighted China’s comprehensive approach, which includes large-scale economic stimulus packages, consumer support programs, modernization of manufacturing with advanced technology, and innovation funding—allocating approximately $1 trillion for these initiatives.
Meanwhile, Indonesia is planning to distribute cash aid to low-income groups, along with a 30% discount on train fares, benefiting around 18 million low-income individuals at an estimated cost of $1.3 billion.
Malaysia has announced plans to offer low-interest loans totaling $317.5 million for SMEs, while Vietnam has introduced an 18-month reduction in value-added tax aimed at stimulating consumer spending.