Thailand’s trade talks with the US collapse, leaving it sidelined as neighbours secure deals. With a slashed growth forecast and rising tariffs looming, Finance Minister Pichai vows to return to negotiations amid a mounting economic and political crisis.
Deputy Prime Minister and Finance Minister Pichai Chunhavajira had tough news on Friday: trade talks in Washington have collapsed. Thursday’s meeting with U.S. negotiators ended without a deal, as American officials prepare to close the books and issue final tariff decisions. Thailand is out—while others are locking in deals. Vietnam has already secured a 20% tariff rate. Cambodia says it’s close to signing. Indonesia, cutting excise duties on 70% of U.S. imports, is pushing for an even better deal. Thailand, on the other hand, remains on the sidelines—reluctant, excluded and now exposed. This failure comes as the economy tumbles. The World Bank has slashed Thailand’s 2025 growth forecast to just 1.8%. Once seen as a reliable U.S. partner, Thailand now finds itself boxed out and falling behind—both diplomatically and economically. The clock is ticking, and the cost of delay is rising.
Thailand is presently reeling from a dual crisis—economic slowdown and political instability. Both are now weighing heavily on the country’s prospects. On Friday, the World Bank issued a stark warning. It slashed Thailand’s GDP growth forecast for 2025 to just 1.8%. This was a sharp drop from its earlier projection of 2.9% made in February.
Moreover, the World Bank now expects only 1.7% growth in 2026. Last year, Thailand’s GDP rose by 2.5%. The downgrade reflects multiple factors.
First, while exports have risen in the short term, the domestic economy is squeezed by a liquidity crisis. Second, tourism—especially from China—is falling this year. Third, household consumption and private investment have softened noticeably.
Thailand’s economic growth outlook lowered by World Bank amid weak exports and slower tourism in 2025
Notably, these projections match those from Thailand’s own agencies. Both the Bank of Thailand and the National Economic and Social Development Council have issued similar outlooks. Still, the numbers are sobering. They signal deep-rooted challenges that may take years to fix.
At the same time, Thailand is struggling on another front—international trade. This week, hopes were high for a breakthrough deal with the United States. However, the much-anticipated negotiations failed to deliver results. Deputy Prime Minister and Finance Minister Pichai Chunhavajira led the Thai delegation. He flew to Washington, hoping to finalise a new trade agreement.
While in Washington, Pichai met with several top U.S. officials. These included Jamieson L. Greer, the United States Trade Representative. Greer, a key figure in President Trump’s cabinet, strongly supports the “America First” trade doctrine. He is known for pursuing aggressive, reciprocal trade terms.
In addition, Pichai met with the U.S. Deputy Treasury Secretary and private sector representatives. These included major American investors in Thailand and senior voices from the agricultural industry. The U.S. agriculture sector holds significant sway in policy circles.
Thai delegation led by Finance Minister fails to reach trade deal in Washington despite high-level U.S. meetings
Yet, despite those extensive talks, no deal was reached. During a layover in South Korea on Thursday, Pichai admitted the outcome. “We haven’t closed the deal,” he said in a video message. “But we’ve gained important feedback.”
Importantly, he emphasised Thailand’s continued commitment to achieving a “win-win” solution. He said Thai negotiators would adjust their proposals and return to the table. “This isn’t the end,” Pichai said. “We will continue working for the benefit of both countries.”
He also noted that the talks deepened mutual understanding. The meetings, he explained, clarified the expectations of senior U.S. officials. This insight will help Thailand tailor future proposals more effectively.
Nonetheless, the absence of a breakthrough is significant. Before the trip, Thailand was aiming for a reduced tariff rate of 8%. By midweek, negotiators had accepted that a 10% rate might be more realistic. Now, even that target seems uncertain.
Pichai confirms ongoing negotiations as Thailand’s tariff reduction target shifts amid stalled U.S. trade talks
Meanwhile, regional neighbours are advancing faster. Vietnam, facing a crushing 46% tariff wall, finalised a deal with the U.S. this week. As a result, its tariff will now drop to 20%. However, goods originating from China will still face a 40% penalty rate.
Similarly, Indonesia is progressing rapidly. Jakarta has already cut excise duties on over 70% of U.S. imports. In exchange, it hopes to secure most-favoured-nation status. That would give it a reduced 10% tariff rate. Initially, Indonesia had faced a 32% rate—slightly below Thailand’s current 36%.
By contrast, Thailand remains in limbo. American officials are preparing formal letters to conclude the initial round of negotiations. These are expected to be released before the July 9 deadline. Without a deal, Thailand may remain stuck with a 36% tariff rate.
In Bangkok, concerns are growing. On Friday, Deputy Finance Minister Julapun Amornvivat voiced his frustration. He confirmed that no final agreement had been reached. “It may take more time,” he said. “We are still negotiating at several levels.”
Thailand lags behind neighbours as U.S. trade deal talks stall and tariffs remain uncertain before July 9 deadline
He also expressed hope that the U.S. might delay implementation of new tariffs. However, he admitted this was not guaranteed. “We hope for understanding,” he said, “but it may not happen.”
Julapun also commented on Vietnam’s recent trade deal. Under its agreement, Vietnam accepted a 20% import tax on its goods. In return, it will allow U.S. imports at a 0% rate. “That’s worrisome,” he said. “But Vietnam’s relationship with the U.S. is very different.”
He argued that Thailand’s long-standing partnership with the United States should carry weight. However, he warned that outcomes are far from certain. “We are watching closely,” he said. “We remain concerned.”
Julapun further revealed that the government is preparing for all scenarios. If tariffs revert to 36%, a financial cushion will be deployed. The government has set aside ฿10 billion from a ฿115-billion stimulus package. These funds will help affected businesses and protect jobs.
On Friday, Finance Minister Pichai reiterated his commitment. He confirmed that Thailand will return to the negotiating table with revised terms. “We received valuable input,” he said. “That will inform our next steps.”
Thailand prepares financial support as tariffs remain uncertain and pledges renewed trade talks
He emphasised that future proposals will reflect the principle of mutual benefit. “The goal remains a sustainable agreement,” he added. “One that’s fair to both sides.”
The stakes are rising fast. Trade policy is becoming a key battleground for Thailand’s economy. A new deal could boost exports, improve investor confidence and reduce trade uncertainty. But failure would compound existing problems.
And those problems are already severe. According to the World Bank, Thailand is facing structural and cyclical pressures. First, private consumption is weakening. Households are cutting back amid high debt and weak earnings.
Second, public finances are under stress. The fiscal deficit rose to 6.3% of GDP in the first half of 2025. This increase reflects heavy stimulus spending and faster-than-usual capital investments.
Meanwhile, public debt has climbed to 64.4% of GDP. That’s up from 41.4% in 2019. This narrowing fiscal space limits future policy options.
Rising fiscal deficit and public debt compound Thailand’s economic challenges amid weakening investment
The inflation picture is also troubling. While prices remain stable, that reflects weak demand, not policy success. Inflation is expected to average only 0.3% in 2025. It may rise to just 1% in 2026.
Monetary policy remains flexible for now. However, the underlying problem is not inflation—it’s stagnation. The World Bank warns that without reform, long-term growth will remain stuck below 2%.
To reverse this trend, structural reforms are urgently needed. The World Bank urged Thailand to prioritise digital transformation and infrastructure investment. It also stressed the need to diversify trade partnerships and boost productivity.
According to senior economist Kiatipong Ariyapruchya, rebalancing is vital. “Public investment must increase,” he said. “But it must be high-quality and well-targeted.”
Furthermore, he said Thailand must attract better investment. That includes promoting innovation and upgrading workforce skills. “We must adapt to new global trends,” he warned. “The old model is no longer enough.”
World Bank urges urgent reforms and better investment to tackle stagnation and secure sustainable growth
Political turmoil adds yet another layer of risk. Prime Minister Paetongtarn Shinawatra remains suspended. Mass protests have flared in response. The crisis is delaying the fiscal budget and key infrastructure rollouts.
These delays could further dampen private investment. Businesses may hold off until there is more political clarity. That, in turn, could drag down growth even more.
With the economy sputtering, the top Thai team flies to the US to secure a favourable trade deal with Trump
Minister dismisses reports of an 18% tariff deal with the United States on exports. Talks still in play
In short, Thailand is at a crossroads. It must act swiftly to resolve trade disputes, restore political order and reignite economic momentum. The next few weeks could prove decisive.
Trade talks will likely resume shortly. Thailand’s revised proposal may be delivered ahead of the July 9 deadline. Until then, uncertainty remains. But the message from Bangkok is clear: Thailand is not giving up. It still hopes for a deal that benefits both sides—and avoids deeper economic pain.
Join the Thai News forum, follow Thai Examiner on Facebook here
Receive all our stories as they come out on Telegram here
Follow Thai Examiner here
Further reading:
Prime Minister Paetongtarn pulls her government back from the brink with emotional televised apology
Government on brink of collapse as the Bhumjaithai withdraws from Paetongtarn’s cabinet over clip
