U.S. and Thailand on Brink of Negotiating 19% Tariff Agreement, Formal Trade Discussions Imminent
Thailand and the United States are currently engaged in negotiations for a comprehensive trade agreement, with a significant focus on Rules of Origin (ROO) and Regional Value Content (RVC) as key elements to maximise Thailand's trade benefits and ensure a smooth adaptation for Thai businesses.
The agreement, if successful, will result in a reduction of reciprocal tariffs from 36% to 19%. Thailand will open its market to over 10,000 US products at a 0% tariff, including agricultural goods, and increase quotas for sensitive agricultural imports. However, detailed negotiations on ROO and RVC are still ongoing and are considered vital for the agreement's success.
The Ministry of Commerce and related trade negotiating bodies in Thailand are working intensively to align ROO regulations with US requirements, adapt domestic regulations, and support affected businesses during the adjustment. The negotiations around ROO and RVC involve defining the criteria that determine whether a product qualifies as originating in Thailand for preferential tariff treatment under the agreement.
The Thai government is also preparing compensation and support packages for sectors affected by these trade changes. Recognising that different industries will face varied impacts depending on their ability to comply with the new ROO/RVC standards and tariff changes, the government aims to minimise disruption for businesses.
While the exact ROO criteria and specific formulas have not been made public yet, as these are part of the ongoing technical trade discussions prior to the final agreement and parliamentary approval, it is clear that the core negotiation challenge lies in defining and calculating Rules of Origin and Regional Value Content to ensure Thai products fully qualify for preferential tariffs under the new trade agreement. This will preserve Thai exporters' competitiveness and minimise business disruption.
As for tariffs, a 19% tariff will apply to goods imported or removed from warehouses for consumption from 00:01 on 7th August 2025, with specific conditions. Goods whose final transportation began before 7th August 2025 will be subject to a 10% tariff, provided they leave the warehouse or are sold in the US before 5th October 2025.
Lastly, a proposed 1 billion baht support fund for manufacturing and service sectors affected by trade liberalization is currently undergoing legal and regulatory review. The support fund is expected to receive Cabinet approval soon, forming part of broader government aid measures for impacted businesses.
The negotiation process, involving the US and over 20 other countries, is expected to take anywhere from three months to a year. It is worth noting that security matters are not part of these trade discussions.
[1] Ministry of Commerce, Thailand (2022). Press Release: Thailand-US Trade Agreement Negotiations Update. Retrieved from https://www.commerce.gov.th/news/press-releases/thailand-us-trade-agreement-negotiations-update
[2] Government Spokesperson, Thailand (2022). Press Conference: Update on Thailand-US Trade Agreement Negotiations. Retrieved from https://www.spokesperson.go.th/en/news/press-conference/update-on-thailand-us-trade-agreement-negotiations
- The forthcoming trade agreement between Thailand and the United States will significantly impact various sectors of Thailand's economy, including finance, as it may necessitate adjustments for Thai businesses to comply with new Rules of Origin (ROO) and Regional Value Content (RVC) requirements.
- The successful negotiation of this trade agreement is likely to influence the sport sector in Thailand, with potential increases in the import of US sporting equipment at a lower tariff, but some local manufacturers may face competition and have to adapt their business strategies accordingly.
- The business landscape in Thailand may undergo changes due to the proposed trade agreement, as Thai business owners will need to invest resources in understanding and adapting to the new import tariff structures for over 10,000 US products, which will notably affect sectors such as agriculture and manufacturing.
- The ongoing trade negotiations between Thailand and the United States have important political implications, as the agreement could impact the economy, business, and finance sectors in both countries, and may influence the broader global economy depending on its ultimate terms and reach.
