Thailand has formally submitted a new trade proposal to the United States in an urgent bid to prevent the implementation of steep new tariffs that could jeopardize nearly $55 billion in annual exports to its largest market. The updated offer comes as US authorities threaten to impose a 36% import levy on Thai goods unless a last-minute compromise is reached before a July 9th deadline, when a 90-day grace period keeping tariffs at 10% expires for most trading partners.

Dire Warning for Thai Economy

The ongoing trade dispute threatens to further dampen Thailand’s economic prospects just as the country contends with sluggish growth, mounting household debt, and persistently weak domestic consumption. Finance Minister Pichai Chunhavajira, who led the recent talks in Washington, indicated a clear sense of urgency, stating, “We heard their feedback and what they were especially interested in and we adjusted [our proposal].” He added that further amendments could still be negotiated as talks continue.

Thailand’s central bank recently revised its 2025 economic growth forecast downward, projecting just 2.3% expansion this year after economic output barely reached 2.5% in 2024—lagging behind major regional peers like Vietnam and Indonesia. Pichai previously warned that growth could fall to barely above 1% if the US hikes tariffs, a major risk considering Thailand’s reliance on export revenues for recovery.

Anatomy of the Trade Dispute

The US accounts for a substantial 18.3% of Thailand’s total exports, with bilateral trade volume reaching $54.96 billion in 2024. American officials cite a persistent trade deficit of $45.6 billion with Thailand as justification for the proposed tariffs. If new levies take effect, Thai exports—including electronics, rubber products, and auto parts—will face crippling price hikes in the critical US market, reducing their competitiveness against rivals from other countries.

According to Thai government data, the three biggest Thai exports to the US last year were computers, teleprinters and telephone sets (nearly $17 billion), followed by rubber products (about $7 billion), and various auto parts. In turn, the US exported to Thailand crude oil, machinery, and chemical products.

Broader Tensions: Tariffs and Trade Policy

The new tariffs form part of a broader US effort to renegotiate and, in some cases, rebalance trade relationships in response to what Washington views as chronic trade deficits. The Biden administration continued and sometimes expanded certain protectionist measures established under former President Trump, aiming to shore up US manufacturing and address perceived unfair competition—especially from Asia. In 2025, the US has also been locked in similar tough negotiations with other major trading partners, including Vietnam and Indonesia, while warning of further tariffs against economies deemed to have excessively undervalued currencies or trade barriers.

Meanwhile, the proposed commission by the US of a 36% across-the-board tariff on Thai imports is far higher than the World Trade Organization’s typical bound rates for similarly situated nations, fueling alarm among both Thai manufacturers and American retailers wary of higher import costs cascading through global supply chains. According to the US Chamber of Commerce, hiking tariffs could drive up consumer prices and disrupt sourcing for electronics, automotive, and apparel industries.

Recent Steps: The LNG Deal and Energy Security

In a sign of continued bilateral cooperation beyond the dispute, Thai state-owned conglomerate PTT Group in June 2025 inked a major agreement to purchase 2 million metric tons of liquefied natural gas (LNG) per year from Glenfarne’s Alaska LNG project, a $44 billion initiative backed by the US government. The 20-year deal aims both to diversify Thailand’s energy supplies and provide a new reliable market for American LNG exports, even as broader trade friction persists.

Nonetheless, Thai officials have warned that if the tariff threat materializes, it could undermine the country’s ability to import essential raw materials and energy products from the US, potentially increasing costs for the Thai manufacturing sector already squeezed by high input prices and slowing export orders from China and Europe.

Thailand’s Weakening Economic Outlook

Beyond the tariff threat, Thailand faces deeper economic challenges. Household debt stands at around 91% of GDP, one of the highest ratios in Southeast Asia. As tourism—another pillar of the economy—recovers only gradually post-pandemic, growth prospects have become tightly tethered to the ability of exporters to maintain access to markets like the US and EU. Recent drought conditions and a reduction in public infrastructure spending have also contributed to the drag on growth.

The Bank of Thailand has so far resisted calls to sharply cut interest rates, wary of further currency depreciation and capital outflows, even as business confidence has waned amid trade uncertainty. In response, the government in Bangkok has rolled out stimulus measures, including direct cash transfers and targeted tax holidays, but private investment remains tepid.

Global and Regional Implications

Thailand’s trade standoff with the US is being closely monitored by other Association of Southeast Asian Nations (ASEAN) members. Many export-driven economies in the region worry about contagion effects if other bilateral relationships face similar tariff escalations. For the US, the episode underscores the complexity of managing trade policy amid shifting geopolitical dynamics and domestic calls for increased economic self-sufficiency.

What’s Next?

Minister Pichai has emphasized Thailand’s flexibility and commitment to continued negotiation, hoping to find a solution that preserves market access and reflects both countries’ interests. While some observers are cautiously optimistic that both parties will compromise to avert the full 36% tariff shock, there is no guarantee that a deal will be reached before the critical July 9 deadline.

Businesses on both sides of the Pacific are preparing contingency plans: Thai exporters are exploring alternative markets within Asia and Europe, while some US importers are warning of likely price increases for consumers and supply disruptions. The coming days could prove decisive for the future of bilateral economic ties and for setting precedent on how the US approaches trade with emerging powers across Southeast Asia.