Recently, new developments have emerged in the negotiations between the United States and the high-tariff Asian countries Cambodia and Thailand.
According to a report by Japan's Yomiuri Shimbun on July 5th, the Cambodian government announced on July 4th that it had reached an agreement with the United States in tariff negotiations. The two sides will issue a joint statement on reciprocal tariffs in the near future, but the specific contents of the agreement, including tariff rates, remain unclear.
Thai Finance Minister Phichai Chunhawajila said in an interview with Bloomberg on the evening of July 6 that Thailand's latest proposal aims to expand the scale of bilateral trade, reducing the $46 billion trade surplus with the United States by 70% within five years and achieving trade balance within seven to eight years. Pichai said that the revised proposal is expected to be submitted by July 9, before the end of the 90-day tariff moratorium announced by President Trump. He said that if the proposal was accepted, Thailand would immediately lift import tariffs or non-tariff barriers on most products and gradually remove restrictions on a few products.
Cambodia announced an agreement with the United States
Cambodia has become the second Southeast Asian country to reach a tariff agreement with the Trump administration after Vietnam. According to the information released by the Cambodian government, Cambodian Deputy Prime Minister Sun Chanthol held an online consultation with Sarah Ellerman, the Assistant Trade Representative of the United States Trade Representative for Southeast Asia and Pacific Affairs, on July 4. Both sides reached a consensus on the draft of the joint statement.
The Trump administration had previously stated its plan to impose a 49% equivalent tariff on Cambodia, which is the highest tax rate faced by Southeast Asia.
Cambodia's total export value in 2024 is 26.2 billion US dollars, with nearly 40% of its exported goods sold to the United States. The United States is Cambodia's largest export destination. Analysts believe that in order to alleviate the impact on pillar industries such as the textile industry, Cambodia may have made concessions in areas such as expanding imports of American products.
Thailand plans to make more trade concessions to the United States
Thailand is making a final effort to avoid the 36% punitive export tariff threatened by the Trump administration. The country has proposed opening up greater market access to US agricultural and industrial products and increasing the purchase of energy and Boeing aircraft.
"We are presenting them with a mutually beneficial proposal," Pichai said. "The United States can expand trade with us, and we also have the opportunity to streamline processes and reduce red tape."
This revision was made following the first ministerial-level tariff negotiations with US Trade Representative Jamison Greer and Deputy Treasury Secretary Michael Falkend on July 3. Pichai said that among the US products that will gain greater market access in Thailand, many are in short supply domestically in Thailand, and thus are unlikely to harm the interests of local farmers or producers.
Thailand is one of several countries that are eager to finalize an agreement with the United States to avoid high tariffs. If an agreement to lower tariffs is not reached with its largest export market, Thailand's exports of goods may drop significantly and its expected economic growth rate may be cut by as much as one percentage point.
Neighboring Vietnam reached an agreement last week. Trump announced that a 20% tariff would be imposed on Vietnamese exports and a 40% tariff on goods identified as re-exported.
Pichai said that Thailand is striving for the most ideal 10% tariff rate and claimed that even a range of 10% to 20% is acceptable. The worst-case scenario is that the agreements we reach among our regional neighbors are the most unfavorable. It is said that Thailand has also made more "aggressive" adjustments to its procurement plans for US energy (especially liquefied natural gas) and Boeing aircraft, which is expected to significantly reduce trade imbalances.
Thai petrochemical companies, including Siam Cement Group Chemicals and PTT Global Chemicals, have committed to importing more ethane from the United States. The state-owned oil company of Thailand said it might purchase 2 million tons of liquefied natural gas annually from the Alaska gas project over a 20-year period, while the state-controlled company of Thailand is exploring interest in jointly developing the project. Thai Airways has indicated that it may purchase as many as 80 Boeing aircraft in the coming years.
Reaching a lower US tariff rate is regarded as the key to protecting Thailand's trade-dependent economy from further downside risks. At present, Thailand's economic growth is under pressure from the highest household debt in Southeast Asia and sluggish domestic consumption. A favorable agreement will also help ease investors' concerns that have been exacerbated by the political unrest caused by Prime Minister Pethongtan Shinawatra being suspended by the court on suspicion of moral misconduct in handling the border dispute with Cambodia.
In the first five months of this year, Thailand's exports increased by approximately 15%, mainly due to advance orders placed during the proposed 90-day suspension of high tariffs.
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