Thailand blindsided as U.S. slaps 36% tariff, dwarfing Vietnam’s 20% deal. Exports, jobs and investor confidence plunge as officials stall, misread signals and lean on China and ASEAN. With August 1 looming, failure to act may seal years of economic decline.
Thailand is still reeling from the U.S. slapping a 36% tariff on its imports starting August 1. The kingdom got outplayed—big time—by Vietnam. Yet despite the shock, Thailand is stuck in the same cycle it faced back in April: half-hearted analysis, denial of the real damage and wishful thinking that the tariff won’t hit as hard as predicted. This stubborn groupthink has dragged the country deeper into economic quicksand. And make no mistake—China’s heavy hand is behind the indecision, pulling the strings on crucial economic moves. Bottom line: if Thailand doesn’t fix its broken ties with the U.S.—fast, before August 1—it’s doomed to more of the same. No patchwork deals or last-minute fixes will erase the damage from last Tuesday’s blow.
The United States has imposed a steep 36% tariff on Thai exports. This move marks a major rupture in trade relations. Washington confirmed the measure in a formal letter on Tuesday.
Vietnam, meanwhile, secured a lower 20% rate. Its stock market rose more than 3% in the following days. In contrast, Thailand’s SET Index is predicted to fall below 1,000 if the situation is not corrected, reflecting investor anxiety. Presently, it stands at 1,115.58, down 20.7% this year.
This outcome is the result of diplomatic missteps by Thai officials. For example, Thailand failed to engage U.S. trade representatives proactively. Additionally, it sent mixed signals in prior meetings. Beijing’s warnings ahead of the July 3 talks added to the tension. Similar Chinese warnings were also issued in April, right before a cancelled U.S. meeting.
Thai diplomatic failures and Chinese warnings contribute to rising tensions before the August tariff deadline
Finance Minister Pichai Chunhavajira, age 76, has relied on outdated rhetoric. He keeps using the phrase “Win-Win,” originally favoured by the Chinese Communist Party in its vision of a shared world destiny. In short, the global world order where China is destined to emerge as the dominant economy. Indeed, this was the status quo among most analysts before the Trump presidency in 2017 upended it. This slogan feels tone-deaf amid growing economic pressure and shifting alliances.
While Vietnam made rapid, strategic moves to protect its interests, Thailand hesitated. As a result, the kingdom now appears sluggish compared to its regional peers. Thailand’s indecision has further cemented its image as Southeast Asia’s economic laggard.
The consequences are dire. The U.S. is Thailand’s largest export market. In 2024, Thai exports to the U.S. totalled $55 billion. That amount accounted for 10.46% of Thailand’s GDP, or around ฿1.793 trillion. Last year, Thailand enjoyed a $45 billion trade surplus with the U.S.
Despite this, Thai officials appear to downplay the risks. On Thursday, the University of the Thai Chamber of Commerce (UTCC) estimated a GDP hit of only ฿200 billion. However, many economists say this figure is overly optimistic.
Thailand’s delayed response risks huge economic losses as Vietnam benefits from faster strategic moves
The 36% tariff affects a broad range of sectors. These include electronics, food products, rubber, and apparel. Many Thai exporters now fear they will be priced out of the U.S. market.
Former Prime Minister Thaksin Shinawatra addressed the nation on Wednesday. He acknowledged that re-routing Chinese exports through Thailand must stop. If not, Thailand could face accusations of illegal transshipment.
However, Thaksin also offered a note of caution. He said U.S. companies may not leave Thailand overnight. With 20 days left before the tariffs begin on August 1, he urged calm.
Certainly, he warned negotiators not to give away too much. According to Thaksin, President Donald Trump negotiates like a businessman. Therefore, outcomes may still shift at the last minute.
At the same time, Thaksin admitted structural weaknesses in Thailand’s trade strategy. Vietnam, for instance, has more trade deals. It has agreements with the EU and the UK. It is also a member of the CPTPP.
Thaksin warns against rushed concessions but notes Vietnam’s stronger trade deal compared to Thailand
Thailand, on the other hand, is drawing closer to China and the BRICS bloc. Unfortunately, this direction raises concerns in Washington. Recent incidents have also stoked tensions.
The extradition of Uyghur refugees to China angered human rights advocates. Additionally, the handling of American academic Paul Chambers has sparked U.S. criticism. These episodes have clearly strained bilateral ties.
Former Finance Minister Korn Chatikavanij voiced deep concern. He said the 36% tariff represents a worst-case scenario. Korn urged Thailand to form an ASEAN-wide negotiation team immediately. This would give the region a stronger voice when talking to Washington.
He also advised adjustments to the 2026 national budget. The goal would be to support industries and workers hurt by any trade concessions. Korn emphasised the need for transparency.
If Thailand agrees to cut nearly all tariffs on U.S. goods, the public must be informed. But even then, he warned that matching Vietnam’s terms may not guarantee equal benefits. The U.S. sees Vietnam as more business-friendly.
Korn Chatikavanij urges ASEAN unity and budget changes to address worst-case tariff scenario risks for Thailand
Korn also suggested taking the issue to the World Trade Organisation. A collective ASEAN approach could increase pressure on the U.S.
Market analysts echoed these concerns. Wasin Parithan of Definit Co said the Thai stock market faces ongoing pressure. Chayanon Rakkanjanan of Finnomena predicted further volatility in the SET index.
He said support might come at 1,350 points. However, global uncertainty will continue to weigh heavily. Chayanon recommended a diversified portfolio. He advised a 50% equity split between U.S. and emerging markets. The rest should go into bonds and alternative assets.
Meanwhile, Vietnam has attracted new investment. Thu Nguyen of VinaCapital said the 20% tariff deal impressed global investors. After the announcement, nearly ₫5 trillion ($191.465 million) flowed into Vietnam’s markets.
Analysts warn of stock market volatility while Vietnam attracts strong new investment after tariff deal
The VN Index rose over 3% in response. Year-to-date, it is up almost 13%. Investors are betting on Vietnam’s upgrade to “secondary emerging market” status by FTSE Russell. That change could attract $6 billion in new inflows.
Vietnam earned its edge by acting quickly. It agreed to remove tariffs on all U.S. goods. Thailand has been reluctant to follow suit. President Trump said the 40% penalty would apply only to Chinese goods rerouted through Vietnam. Direct Vietnamese exports remain protected.
Thai exporters now fear a loss of competitiveness. Thanakorn Kasetsuwan of the Thai National Shippers’ Council (TNSC) called the 36% tariff a heavy blow. Key industries such as electronics, food, and agriculture are at risk.
He warned of potential layoffs, capital flight, and lost income, especially in rural areas. The TNSC has proposed a three-step response plan.
Thai exporters face heavy blows from tariffs, with threats of layoffs and capital flight in key industries
First, eliminate Thai tariffs on U.S. imports. Second, offer new privileges to U.S. investors. Third, shift energy imports to favour U.S. sources. These actions aim to rebuild U.S. confidence in Thailand.
The second step includes trade diversification. The 2026-2027 budget should fund trade fairs, international matchmaking, and export support. SMEs must be included in all future growth plans.
Third, the TNSC urged financial relief. It called for urgent talks with the Bank of Thailand. The group wants lower interest rates, wage hike delays, and cheaper logistics.
Exporters are also asking for faster VAT refunds. Additionally, they request tax cuts for international shipping and tighter inspections of imports.
The Thai-Chinese Chamber of Commerce also released new data. Over 52% of respondents expect Thai GDP growth to fall below 1.8% in 2025. The main culprit: U.S. tariffs.
TNSC calls for tariff cuts and financial relief as Thai GDP growth outlook dims under U.S. tariffs
Tourism, autos, food, energy, and steel are expected to suffer the most. Companies also fear being used to repackage Chinese goods. That risk adds to regulatory scrutiny.
Meanwhile, trade with China continues to grow. Unfortunately, this deepens Thailand’s trade imbalance. Imports from China jumped 22.52% in early 2025. Exports rose only 10.45%.
As a result, Thailand now faces a ฿799 billion trade deficit with China. This further undermines confidence in the country’s trade direction.
On July 8, top business groups met to assess the crisis. These included the Thai Chamber of Commerce and the Federation of Thai Industries. They warned of factory relocations and major export losses.
They also urged the government to delay wage hikes. Some want expanded tax relief for struggling firms. A high-level meeting will be held on July 11 at Ban Phitsanulok.
Top business groups warn of factory relocations and urge government action to avoid worsening trade crisis
Finance Minister Pichai will lead the session. He remains hopeful, still promoting the idea of a “win-win” solution. Yet, scepticism is rising.
In another address, Thaksin urged strategic flexibility. He warned against total submission but encouraged creativity. Thailand, he said, must avoid giving up too much, too fast.
He emphasised the need to protect SMEs and rural livelihoods. At the same time, he acknowledged that Thailand leans increasingly on China.
Thaksin stoutly defends Prime Minister Ung Ing and blames the 2017 Constitution for thwarting progress
Vietnam becomes the US partner of choice while Thailand is gutted with a 36% tariff and left the big loser
For now, the clock is ticking. August 1 looms large. Thailand must act swiftly and decisively.
If not, the country could suffer long-term damage. The next 20 days may decide its economic future for years to come. Unfortunately, the noises in Bangkok sound like the same hodgepodge of defensive, collective thinking seen since the crisis emerged in early April.
Certainly, it may be time to concede that Thailand lacks decisive leadership and has become a pawn of China.
