The Ripple Effect EP2: Thailand Caught in the Middle as US Trade Talks Postponed

As the United States (U.S.) imposes a retaliatory import tariff of 37% on Thai goods, Thailand faces significant economic repercussions. In response, the Thai government has developed comprehensive short-term and long-term strategies, focusing on five key negotiation frameworks to present to the U.S.

Thailand-U.S. Economic Negotiations Postponed

The Thai government has been actively preparing for trade talks with the United States Trade Representative (USTR), initially scheduled for April 23, 2025. However, Thailand’s Prime Minister subsequently announced the postponement of these negotiations to an unspecified date, citing the need to monitor the evolving situation and reassess the proposed terms. In these forthcoming discussions, the Deputy Prime Minister and Minister of Finance will represent Thailand, aiming to achieve a mutually beneficial outcome for both nations.

Despite the 90-day delay proposed by the U.S., Thailand continues to face substantial uncertainty. As the U.S. represents Thailand’s largest export market, with annual exports valued at USD 54 billion, the importance of the American market to Thailand’s economy cannot be overstated. This underscores the urgency of successful negotiations aimed at reducing trade barriers.

The Office of SMEs Promotion (OSMEP) has warned that approximately 3,700 Thai small and medium enterprises (SMEs), representing an export value of around USD 7.634 billion annually, will likely be impacted by these trade tariffs. In response, the Export-Import Bank of Thailand has implemented five key support measures:

1. Financial advisory services
2. Debt restructuring and repayment extensions
3. Liquidity support
4. Interest rate reductions
5. Strategic guidance for market diversification

Additionally, the bank provides mechanisms for non-payment risk protection and promotes Thai investment opportunities in the U.S.

 Economic Pressures: Thailand’s Balancing Action

China ranked as Thailand’s second-largest foreign investor last year with investments exceeding THB 170 billion, according to the Board of Investment (BOI) database. This economic reality places Thailand in a precarious position. While the U.S. remains a crucial export destination, China’s significant role as a major investor, particularly in the manufacturing sector, creates complex diplomatic challenges. Ongoing U.S. tariffs continue to burden Thai exports, while China’s assertive approach to protecting its interests further complicates Thailand’s strategic position.

Although, Thailand has maintained neutrality in the ongoing trade conflict, it continues to experience economic fallout from this global dispute. Any concessions made during negotiations with Washington that might undermine Beijing’s interests could trigger retaliatory actions, as China has previously indicated.

 Looking Forward

Thailand now navigates an increasingly complex economic landscape amid continuing trade tensions between global powers. The postponement of U.S. trade negotiations, with no new date established, allows Thai officials to reassess their strategy while monitoring international developments.

The economic impact on thousands of Thai SMEs remains a significant concern for policymakers. Despite Thailand’s carefully maintained neutrality, the country remains vulnerable to broader consequences of this trade dispute. Moving forward, Thailand’s ability to balance these competing interests while protecting its economic sovereignty will be crucial to its long-term prosperity and regional standing.