BANGKOK, THAILAND – The United States kept a punitive 19% special tax on Thai exports in place as trade talks stalled in a technical phase and political uncertainty in Bangkok blocked any swift deal.
US maintains 19% levy despite ongoing talks
The director of Thailand’s trade negotiations department, Chotima Iemsawasdikul, signaled that there would be no quick relief. The 19% tax burden on Thai exports to the United States remained unchanged. Even the contentious threat by former president Donald Trump to raise the levy further, if the conflict with Cambodia was not resolved, continued to hang over Thai exporters.
Political tensions add to economic pressure
Trump’s remark, made after a conversation with Prime Minister Anutin Charnvirakul, underlined the political sensitivity of the dispute. For Thai companies, every percentage point of additional cost meant a loss of competitiveness in their most important overseas market. The economic pain for key industries was described as real and mounting.
Non-tariff barriers at the center of technical talks
The technical discussions focused not only on tariffs but also on a series of non-tariff measures that Washington said were obstructing trade. US critics highlighted sanitary requirements, including the use of growth-promoting substances in pork and specific factory risk assessments. Thailand’s Department of Livestock Development reviewed these demands but stressed that protecting public health was not negotiable, creating a diplomatic balancing act.
Local content and value creation rules as deal linchpin
A central point in the negotiations was the definition of “local content” or Regional Value Content (RVC) rules, which determine how much value must be created in the exporting region. The United States was working on similar provisions with China and aimed to apply them uniformly to all trading partners. Thailand pushed to complete the remaining technical details as quickly as possible, but the process ahead remained complex.
Ratification hurdles delay any agreement
Even if negotiators reached a technical understanding, the draft agreement would still have to be submitted to the newly elected government, endorsed by the cabinet and ratified by parliament. The current caretaker administration was not legally authorized to sign binding international treaties. As a result, any compromise would remain on hold until a fully mandated government was in place after elections, while valuable time slipped away and the 19% tax continued to apply.
Weakened negotiating position in Washington
This political paralysis left Thailand more exposed in its tough trade bargaining with the United States and weakened its negotiating leverage. The prolonged uncertainty risked undermining the confidence of policymakers in Washington. Thai officials faced mounting pressure to show that, despite the domestic crisis, the country remained a reliable and rule-abiding partner.
What is at stake for the Thai economy
The Thai economy could not ignore the 19% US levy indefinitely, as it hit key sectors and curtailed growth prospects. At the same time, the United States was Thailand’s most important trading partner outside Asia, making any escalation into a trade war or additional penalties a severe threat. The negotiations had become a race against time and domestic political instability, with trust in Thailand’s ability to honor and implement trade commitments on the line.
“The Thai economy cannot ignore the 19% US tax in the long term. It hits key industries and costs growth.”
said Chotima Iemsawasdikul, director of the trade negotiations department.
“At the same time, the United States is Thailand’s most important trading partner outside Asia. A trade war or further penalties would be a catastrophe.”
said Chotima Iemsawasdikul, director of the trade negotiations department.
“The negotiations are a race against time and domestic political uncertainty. Thailand must prove that, despite the crisis, it is a reliable and rule-compliant partner.”
said Chotima Iemsawasdikul, director of the trade negotiations department.