Thailand and most of the world today are handed a three months’ pause, until July, from the punitive tariffs on imports to the US announced by Donald Trump last week. The so-called, worldwide reciprocal tariffs with their weird formulae had intended to inflict US import taxes of 36 percent on Thailand, 46 percent on Vietnam and 49 percent on Cambodia. They are now replaced with immediate effect with a 10 percent tariff across the board. The main exception is China with whom the US is already in a trade war with mutual tariffs of 100 percent plus plus.
The American president explained his abrupt change of policy by saying that 75 countries had already approached the US to reach a new trade deal (“kissed my arse” as he indelicately put it) and that some people were “getting a little bit afraid” of the recent international stock market semi-crashes. Spokespeople for Trump say his reversal was always intended after the initial shock of huge tariffs had been registered, though many economists believe he actually blinked because of pressure from political allies and fears that domestic inflation would harm his reputation.
Thailand will now seek a new trade deal with the US designed, in part, to boost American exports such as energy, animal feed, alcohol and aircraft leases. A new deal would also reduce the trade imbalance as Thailand exports to US (mainly electronics, processed food and agricultural items) very much more than she imports. Some of the negotiations may be held jointly with ASEAN partners such as Vietnam and Cambodia whose US tariff charges are even higher than Thailand’s.
However, it is also likely that Thailand will seek to expand her trade with new markets, for example in the Middle East and India, and to negotiate free-trade agreements with the European Union (already well-advanced) and possibly Britain. Donald Trump has already upended the norms of international trade in a very bold, if untried, attempt to bring back manufacturing jobs to America through tariffs. What he may have done is to cause many nations in the medium term to reduce dependency on an American ally perceived as unreliable and unpredictable. In particular, Trump’s recent brainstorming behaviour may encourage Asian nations to collaborate ever more closely with preferred allies. China in particular.
