The Thai parliament has held an urgent debate to explore solutions for mitigating the impact of the US reciprocal tariff. Meanwhile, the government has unveiled its five key measures in response to the tariff.

Parliament on Wednesday (9 April) held an urgent debate regarding the 36% US reciprocal tariff on Thailand to find solutions and measures to address the problem. MPs from both the government coalition and opposition actively engaged in the discussion for several hours.

Meanwhile, Prime Minister Paetongtarn established a task force to deal with the issue and assigned the Thai delegation, led by Finance Minister Pichai Chunhavajira and Commerce Minister Pichai Naripthaphan, to engage in discussions with the US regarding mitigation.

The government proposed five measures to mitigate the impact of the US reciprocal tariff:

1.) to increase imports of agricultural products, namely corn animal feed

2.) to reduce tariffs on certain US-imported products

3.) to ease non-tariff barriers

4.) to ensure export products have verifiable Thai origin

5.) to encourage investment in the US, especially in natural gas.

US tariff is making waves in Thailand

MP Sirikanya Tansakun of the People’s Party revealed that these five measures will not be impressive enough for the US President. On top of that, Thailand is gradually turning the US into its adversary by returning the 40 Uyghurs to China and using the royal defamation law against an American lecturer Paul Chambers.

Other countries, such as South Korea, Singapore, and Japan, are taking action in order to protect affected industries in their countries. Sirikanya reiterated that the Thai government should also take urgent action, particularly to safeguard Thailand’s automotive industry.

The industry has been affected since the U.S. imposed a 25% tariff on vehicles on 3 April. However, there are still no response measures from the government.

The Thai private sector is like a fish out of water, as many rely heavily on the US market. The MP suggested that the government and the Board of Investment find support and reassure them, adding that if a proper solution is not achieved, it could lead to mass layoffs leaving thousands of Thai workers jobless.

Meanwhile, Atthakorn Sirilatthayakorn for the Klatham Party said the government should prioritise the agricultural sector and minimize risks to Thai farmers. Importing certain agricultural products could cause domestic prices to fall. In some cases, such imports may also conflict with existing Thai regulations. He also added that the policy in response to the US tariff should not affect other potential trade partners.

Influx of foreign goods is a major concern

MP Sithiphol Viboonthanakul of the People’s Party suggested that one of the urgent actions the government should take immediately is to protect domestic businesses from an influx of foreign goods. Following the US reciprocal tariff, global producers are trying to find alternative markets for their products, and Thailand is likely to be one of the targets.

Thailand has recently grappled with low-priced products, particularly those from China, due to the first wave of the US-China trade war. At this time, Thai SMEs will have to face an even more challenging situation. Sectors such as plastics, rubber, and furniture are expected to be hit hard.

The MP suggested the government launch three key measures to protect the Thai enterprises.

1. Compulsory registration of foreign e-commerce operators: foreign e-commerce businesses must register as legal entities in the country, allowing the government to regulate these businesses effectively and to ensure product quality.
2. Countermeasures: the government should leverage countermeasures such as anti-dumping tariffs to prevent substandard products with a lower price from being dumped in the country.
3. Prevention of product mislabelling: Thailand needs to ensure that exported products are not from foreign countries and intentionally mislabelled as “made in Thailand”, as seen in Vietnam.

Government’s response

Deputy Commerce Minister Julapun Amornwiwat admitted that the US formula of calculating the reciprocal tariff is what no one ever expected. However, he said this reflected several points. The US is focusing on reducing trade deficits. To address this, the Thai government could increase imports from the US and reduce exports.

After careful consideration, the government realised that reducing exports is not a viable option, as it has always been an important driver of the Thai economy. Therefore, increasing imports of certain products from the US is the strategy the government is considering.

He added that the government takes all proposals into account, such as preventing product mislabelling or reducing non-tariff barriers. There are also issues that have been discussed before but remain unaddressed, such as diversifying exports to other countries around the world. However, this largely depends on financial resources.

The government set aside 5,000 billion baht through the Export-Import Bank of Thailand to support Thai businesses whose main market is the US by helping them access low-interest loans as an initial measure. Further measures for the agricultural sector will follow.

The Deputy Minister said GDP grew by 3% earlier this year, but the recent US reciprocal tariff is expected to have an impact on economic growth, and it is unclear if the original growth target can remain unchanged. The negotiations with the US will play a key role in shaping the country’s GDP.