Thailand Requests US to Cap Reciprocal Tariff at 10% Ahead of July 7 Deadline#

Negotiation Strategy and Developments#

• Thai Proposal and US Response: Thailand, led by Commerce Ministry Permanent Secretary Vuttikrai Leewiraphan, submitted a formal proposal to the US Trade Representative (USTR), securing a negotiation slot for July 3–4, 2025. The US countered with an 18% tariff offer with non-tariff conditions, which Thailand aims to negotiate down to 10%. Pichai emphasized ongoing formal and informal discussions, denying rumors of a confirmed 18% rate as mere economic modeling estimates.Link
• Lobbying Support: Thailand enlisted a US lobbying firm, costing $20,000–$300,000 monthly, to facilitate high-level meetings with key US officials, including Treasury Secretary Scott Bessent. This complies with the US Foreign Agents Registration Act (FARA), ensuring transparency. Pichai justified the expense, citing the potential billions in trade losses if negotiations fail.Link
• Collaborative Approach: The Thai team, involving the Fiscal Policy Office and Department of Trade Negotiations, is coordinating across US agencies (USTR, Department of Commerce, Treasury) to ensure comprehensive negotiations. Pichai stressed a “win-win” strategy prioritizing national interests while addressing US constraints, including non-tariff barriers like regulations and export rules.Link

Economic Context and Stakes#

• Tariff Impact: The US imposed a 10% baseline tariff on April 5, 2025, with a 36% reciprocal tariff set for Thailand post-July 7 if no deal is reached. Thai exports, a key growth driver, surged 13.6–14% in early 2025 but slowed in June due to anticipated tariff hikes, risking a GDP growth drop below 1% if unresolved.LinkLink
• Broader Challenges: Thailand faces a 4.24% tourism decline and political turmoil, exacerbating economic pressures. The government is exploring new export markets (Middle East, Europe, India) and free trade agreements, such as a Thai-EU pact, to mitigate reliance on the US.LinkLink
• Regional Dynamics: ASEAN nations like Vietnam and Cambodia are also negotiating individually, with no country yet securing a final deal. Pichai noted the complexity of talks, with new conditions emerging, but remains hopeful for an extension beyond July 7 based on Thailand’s “attractive” proposal.LinkLink

Risks and Opportunities#

• Risks: Failure to secure a tariff reduction could devastate Thailand’s export and tourism sectors, with economists warning of a severe economic downturn. The 18% US proposal, while better than 36%, includes restrictive conditions that may limit trade flexibility. Political instability and a cabinet reshuffle add uncertainty to Thailand’s negotiating stance.LinkLink
• Opportunities: A successful negotiation could maintain the 10% tariff, preserving Thailand’s competitiveness. The use of a lobbying firm and prior technical discussions enhance Thailand’s position. An extended timeline could allow for refined proposals, potentially aligning with US interests in reducing Thailand’s $46 billion trade surplus.LinkLink

Conclusion#

Finance Minister Pichai Chunhavajira’s trip to the US on June 30, 2025, for tariff talks underscores Thailand’s urgent push to cap the reciprocal tariff at 10% before the July 7 deadline. Supported by a lobbying firm and ongoing technical discussions, Thailand aims to secure favorable terms amid complex, multi-agency US negotiations. While the risk of a 36% tariff looms large, potentially derailing GDP growth, Thailand’s strategic preparation and optimism for an extended timeline offer a path to mitigate economic damage and maintain its competitive edge in global trade.Link