On July 7, the Trump administration announced the first batch of countries subjected to the updated Reciprocal Tariffs and among the 14 targeted nations is Thailand, whose tariff remains at 36%.
Meanwhile, Thailand’s immediate neighbor Laos, Myanmar, and Cambodia all get tariff cuts, especially with Cambodia’s significant 13 percentage points reduction to 36%—the same amount as Thailand. Furthermore, the kingdom’s trade rival Malaysia and Vietnam both receive 25% and 20% levy, respectively.
With this new announcement, tariffs on Thailand and Cambodia now sit at the same level. Thailand has a higher GDP at $526 billion compared to Cambodia’s $46 billion, while has long been a trading partner with the U.S. Logically, one should try to compromise with its partners rather than ramping up its extortion.
Realistically, Cambodia should not have any bargaining chip or concessions to be bestowed with a 13 percentage point cut, while Thailand, though pitching a last ditch effort before the deadline, is a bigger trading partner and the proposal offered to the Trump Administration should at least be considered as an act of good faith.
Furthermore, the U.S. President Donald Trump has recently threatened additional 10% tariffs on countries aligning themselves with the BRICS anti-US agenda. Thailand, a partner country to the bloc, is now at risk with further tax escalation.
These moves may implicate the U.S. shifting diplomatic stance on Thailand.
Thailand has historically always straddle the line between two economic spheres, while the kingdom exports a significant portion of its products to the U.S., it is also importing just as much from China—the U.S. main economic and geopolitical rival.
For decades, China has aimed to integrate the Southeast Asian market into its economic sphere. Currently Myanmar, Laos, and Cambodia are highly integrated into the Chinese market, while Thailand maintains its 0% tariffs on most imports from China.
This shifting stance may indicate that the U.S. is trying to pressure Thailand to align with or closer to the U.S. instead of leaning toward China. The sign of this political subterfuge can be seen with the US-Vietnam trade deal, in which Vietnam would completely open its own market to the U.S. in exchange for reducing tariffs to 20%—the lowest in the region so far.
