U.S.-Thailand tax negotiations continue with a pending final accord confirmation
Deputy Prime Minister and Finance Minister Pichai Chunhavajira has confirmed ongoing tax negotiations with the United States, stating that Thailand has entered the final stage of the discussions. The discussions, which have been ongoing since late July 2025, are centred around tariff rates and critical new local content rules with stringent measures against transhipment.
In a recent press conference, Pichai Chunhavajira emphasized that Thailand is awaiting a response from the US in the negotiations. He mentioned that the proposal Thailand has already submitted is of significant importance. The Deputy Prime Minister also expressed confidence that a final agreement will be reached soon.
Regarding the tariff rates, Pichai Chunhavajira stated that Thailand should not be subject to a 36% tariff. He confirmed that the US has issued an executive order reducing the tariff rate from 36% to 19%, effective August 7, 2025. This reduction places Thailand competitively among ASEAN countries under the US reciprocal tariff regime.
One of the key points of the negotiations is the local content rule. The US demands a minimum of 50-60% local content for Thai products to qualify for the 19% tariff rate. Thailand, however, is pushing back for a threshold around 40% local content, with a resolution expected by the end of August 2025.
Stringent anti-transshipment measures include a punitive 40% tariff on goods identified as routed through third countries to evade tariffs. US Customs publishes lists of known circumvention facilities semi-annually.
Pichai Chunhavajira also acknowledged that national security is a priority and stated that the focus should be on resolving economic issues before addressing other matters. He did not mention any new issues or concerns related to the ongoing border clashes affecting the negotiations.
The Deputy Prime Minister did not discuss any direct involvement of Thaksin in the US trade negotiations. He also did not provide a specific date for the announcement regarding the tax negotiations, stating that it might be made before or after August 1.
Pichai Chunhavajira did not mention any plans to meet with foreign investors post-August 22. He did confirm that Thailand has committed to various trade concessions, including stricter origin verification, increased US imports in energy and agriculture, and investment incentives for US companies in strategic sectors within Thailand.
In a more nuanced discussion, Pichai Chunhavajira mentioned that the ceasefire agreement with Cambodia, though it may have a psychological impact on tax negotiations, is not his primary focus. He expressed confidence that the US will understand Thailand's need to assess the situation before fully ceasing military operations.
Pichai Chunhavajira also confirmed that Thailand is always ready to negotiate, but the decision to extend the deadline would depend on the US. He did not discuss the potential reduction of taxes due to the ceasefire agreement with Cambodia in detail.
In conclusion, while the tax negotiations are advanced, they are not fully settled. The focus remains on tariff rates reduced to 19% and critical new local content rules with strong measures against transshipment. Border tensions do not appear to be a significant factor affecting these negotiations based on current publicly available information.
- The Deputy Prime Minister has emphasized that Thailand's economy and business sectors are closely tied to the outcome of the ongoing tax negotiations with the United States, as the discussions are centred around tariff rates and crucial local content rules.
- In addition to tariff rates, the Finance Minister has highlighted the importance of investing in businesses that meet the local content rules, as this could potentially reduce the tariff rate on Thai products.
- Moreover, the Deputy Prime Minister has stated that the current negotiations also involve committing to trade concessions, such as stricter origin verification, increased US imports in energy and agriculture, and investment incentives for US companies in strategic sectors within Thailand, which are crucial aspects of the country's finance and business sectors.
