Piti Tantakasem, CEO of TMBThanachart Bank (ttb), shared his views on Facebook, warning that the U.S. reciprocal tariff of 36% would severely impact Thailand through a chain reaction—affecting industries, labor, and investment—amounting to over 1.23 trillion baht in damages.
He stated that reducing import tariffs on U.S. goods would only have a minimal effect on government revenue, but would yield greater economic and social benefits in return.
Piti further explained that agreeing to a 0% tariff on U.S. products and lifting import quotas would cause less overall damage. While some parties may lose out, it would help prevent the Thai economy from worsening and lead to long-term positive effects.
He also noted that Thailand may be facing a “Prisoner’s Dilemma,” as its peers—Vietnam and Indonesia—have already confessed (i.e., agreed to terms) to receive lower tariffs.
Piti further stated that the 36% tariff would be a disaster for Thailand, outlining the following impacts:
Immediate Direct Impacts
- Impact on Exported Goods (1st Order Impact): If Thailand’s key exports to the U.S.—such as electronics, auto parts, electrical appliances, jewelry, and rubber—are subjected to a 36% tariff (which is higher than Vietnam’s 20% and Indonesia’s 19%), the country would suffer a severe loss in competitiveness, especially for goods that the U.S. imports from multiple sources.
- Impact on the Domestic Supply Chain (2nd Order Impact): These exported goods rely on complex domestic supply chains—such as for semiconductors, rubber, and electrical appliances—involving many factories and component manufacturers. It’s estimated that indirect supply chain effects could result in a loss of up to 497 billion baht in industry revenues.
- Impact on Labor and Consumption (3rd Order Impact): Estimates suggest more than 1 million jobs could be lost by 2028, mainly in manufacturing sectors like automotive, electronics, and rubber. Rising unemployment and declining incomes would reduce domestic consumption, leading to broader macroeconomic consequences.
Medium- and Long-Term Impacts
- Loss of Long-Term Competitiveness: Thailand still depends on foreign direct investment (FDI). If the country is subjected to a 36% tariff while competitors receive better rates, it could fall behind in the global production chain and be viewed as a “high-risk” destination for investment.
- Reduced FDI Attraction: Thailand will become increasingly disadvantaged in attracting FDI, especially compared to Vietnam, which has drawn 15 times more FDI than Thailand since 2015. Key industries—such as electronics, automotive, and processed foods, once Thailand’s strengths—could relocate to countries that receive more favorable trade terms from the U.S.
Why is agreeing to reduce tariffs for the U.S.—or “confessing,” as Piti puts it—a viable solution?
Piti pointed out that the impact of reducing import tariffs on U.S. goods is actually minimal and could even be beneficial. He explained both the limited downsides and the potential upsides as follows:
Limited Negative Impact
- If Thailand were to eliminate all import tariffs on U.S. goods, it would lose only 35.9 billion baht in annual tax revenue—just 0.2% of total government income.
- Most U.S. imports already carry low tariffs and are imported in relatively small volumes, so the overall effect would be insignificant.
Potential Benefits
- Lower animal feed costs and improved competitiveness: Importing U.S. corn, which is about 14% cheaper than that from Myanmar and Laos, could lower animal feed costs by up to 60 billion baht. This would boost the global competitiveness of Thai processed products such as chicken, pork, and pet food. It would also help reduce incentives to grow corn in highland areas, thereby easing the problem of PM2.5 pollution from burning in northern Thailand and neighboring countries.
- Cheaper imports of medicines and medical equipment: Lower prices for U.S.-made pharmaceuticals and medical devices could benefit state welfare and healthcare systems, without harming local producers—since they often manufacture different categories of products.
Piti concluded with a message of support:
“I hope the negotiation team can rise above individual interests and losses in order to achieve the broader benefits for the nation as a whole.”