The Shock of a 36% Tariff—Thailand's Final Battle with the U.S. with "Almost Zero Tariffs"

1. Prologue: The Meaning Behind the "36%" Figure

On the night of July 7, 2025, a letter from Washington shook Bangkok. The "36%" figure mentioned in the letter was the tariff rate assigned to Thailand on the U.S. "reciprocal tariff" policy list. This rate far exceeds the typical tariff of less than 10% imposed on middle-income countries accessing developed markets and even surpasses the symbolic 25% from the U.S.-China trade war in 2018. The impact on Thailand's key exports, such as electrical and electronic components, automotive parts, rubber products, and processed foods, is estimated to affect 20% of annual exports, amounting to 300 billion baht.Moneyweek

2. Bangkok's Immediate Response: Proposing the "Zero Tariff" Card

At a seminar on July 14, Finance Minister Pichet Chunhavajira stated, "The U.S. demands 'ambitious' concessions, but we have no time," indicating plans to significantly reduce import taxes on U.S. products and accept agricultural and seafood products like longan and tilapia with zero tariffs. Additionally, they are considering offers beyond conventional frameworks, such as lifting the ban on importing left-hand drive cars, permanently abolishing FTA item taxes, and additional purchases of Boeing equipment and LNG.mint

3. The Trump Administration's "Additional Demands": Beyond Trade

According to negotiation sources, the U.S. has presented conditions including "geopolitical alignment"—specifically, establishing a system to prevent rerouted exports to China. Specific measures include strengthening certificates of origin, expanding surveillance on RCEP-related manufacturing bases, and revising intellectual property and data localization regulations. Within the Thai government, there is strong caution against "concessions that could infringe on sovereignty."

Given this background, the Ministry of Foreign Affairs has elevated the negotiation window from the Ministry of Commerce to the National Security Council (NSC), creating an unprecedented system involving the military.

4. Opinions on Social Media—The Rise of "#TariffGateTH"

In the Reddit r/Thailand thread, voices of opposition arise, stating, "The 36% tariff is merely a tax paid by U.S. consumers," while many users point out, "Thailand has shut out U.S. products with import taxes ranging from 100% to 400%, so it's self-inflicted." A Thailand-based poster, soonnow, sarcastically noted, "Thailand, Indonesia, and Vietnam are the main suppliers of rubber. If all are taxed, the U.S. will just buy expensive rubber," and Tawptuan countered, "Don't forget the fact that U.S. cars face up to 428% Thai-side tax burdens."

*Wise-Profile* mocked the political instability, stating, "The U.S. is just afraid of the political risk in a country where three prime ministers rotate."Reddit

Meanwhile, on X (formerly Twitter), hashtags #BoycottThaiGoods and #OpenThaiMarket trended. Conservative influencers criticized, "Thailand is helping reroute exports as China's 'factory,'" while free trade advocates countered, "Turning against the largest U.S. corporate investment destination in Asia is foolish."

5. Impact Estimates on Domestic Industry

The government think tank NESDC estimates the GDP reduction effect of full tariff application to be up to 1.0 points. Specifically, the electrical and electronic sector is expected to lose 65 billion baht in exports, automotive parts 48 billion baht, and rubber and plastics 30 billion baht. To support the cash flow of export-oriented SMEs, the government plans to provide an emergency loan framework of 200 billion baht and foreign exchange hedge subsidies.Seeking Alpha

6. Ripple Effects on the ASEAN Supply Chain

Thailand, already home to Japanese and Western Tier-1 production bases, is known as the "Detroit of Asia." If the 36% tariff becomes a reality, there is a risk that export bases for finished vehicles to the U.S. will shift to Indonesia or Mexico, accelerating the restructuring of the regional supply chain. In fact, Honda and Ford reportedly told local newspapers they are prepared to shift some final assembly processes to Malaysia. In the long term, there is a view that semiconductor assembly in the Philippines and EMS in Vietnam will become the "winners."

7. Roadmap to the Negotiation Deadline "D-Day"

8. The Lingering Shadow of "36%"

In the past, the U.S. has extracted "near-zero" compromises just before imposing tariffs on countries like South Korea (steel), Brazil (aluminum), and India (pharmaceutical raw materials). However, Thailand, with a 72% trade surplus with the U.S., symbolizes a "structural deficit" and is easily used for political leverage by the White House. U.S. trade experts believe "at least a symbolic tariff rate of around 20% will remain."

9. Epilogue: Can Thailand Swallow the "Painful Concessions"?

Regardless of the negotiation outcome, Thailand has entered a phase where its market closure is questioned. The high automotive tariffs and complex domestic consumption tax system are outstanding even within ASEAN, and this negotiation could be a catalyst for reform. Influencer ChongThai pointed out on X, "The cost of postponing the pain has come due." If the government achieves "zero tariffs," Thai consumers may benefit from lower prices on U.S. products and technology transfers, while the elimination of domestic small-scale manufacturers may be unavoidable.

Conclusion
The "36%" is not just a tax rate but a mirror reflecting the structural issues within the Thai economy. With the deadline approaching, Thailand must choose between short-term painful market opening or long-term export cooling. In any case, this confrontation will likely serve as a litmus test for ASEAN countries redefining their trade relations with the U.S.