Thailand hopes to finalize its trade deal with the United States by the end of the year, the country’s trade minister said yesterday, while issuing a warning about the uncertain trajectory of the Thai economy.
On July 31, the Trump administration announced a 19% tariff on imports from Thailand, but it also warned that any goods considered transshipped from other countries (i.e. China) would be hit with a harsher 40% tariff.
Speaking at an economic forum in Bangkok, Reuters reported that Suphajee Suthumpun said the two countries were finalizing rules of origin and regional value content that would determine which tariff would apply. In his speech, Suphajee described the United States as a “crucial trading partner, worth around 1.9 trillion baht.” [$58 billion] in exports.
Suphajee, the former CEO of hotel conglomerate Dusit Thani, who rose to the post of trade minister when Prime Minister Anutin Charnvirakul took office last month, said negotiations on free trade agreements with the European Union and South Korea should also be completed by the end of the year or early 2026.
The US tariffs come at an unfortunate time for Thailand’s economy, which is struggling to recover from the recession caused by the COVID-19 pandemic. In its latest regional economic update, released this week, the World Bank forecast that Thailand’s economy will grow by just 2% this year and 1.6% in 2026. This compares to growth of 4.1% in 2018.
So far, the tariffs have had a negative impact on Thai exports, with industrial production falling 4.19 percent in August.
“Our country’s growth is continuously slowing down,” Suphajee said at yesterday’s conference, according to The Nation. “If we do nothing, we will surely be stuck in the loop because this year we will probably not exceed 2 percent.” She cited Thai government estimates that economic growth would be between 1.8 and 2.3 percent this year.
In addition to tariffs, the Thai economy faces an aging population, high household debt and a highly valued currency that makes life difficult for Thai exporters. Suphajee warned that the Fed’s rate cut had caused capital inflows that pushed up the value of the baht, which has risen steadily since the start of 2025.
This has reduced Thailand’s competitiveness compared to its regional rivals, notably Vietnam, whose economy, according to the World Bank, is expected to grow by 6.6 percent this year – despite the impact of US tariffs. In August, the country’s Ministry of Tourism and Sports announced that foreign tourist arrivals had fallen by more than 7 percent since the start of the year.
Thailand is also threatened by the specter of deflation, having recorded six consecutive months of negative inflation. Suphajee stressed that urgent demand stimulation measures are needed to reverse this trend and restore the purchasing power of the public. Late last month, Finance Minister Ekniti Nitithanprapas said the economy was “heading into a downward spiral and growth is close to zero.”
So far, Anutin’s government has pledged to take a number of steps to address these economic challenges as much as possible before the planned dissolution of Parliament early next year. In a political statement to Parliament, Anutin announced measures to reduce the cost of living, combat household debt and boost domestic tourism. These include a 47 billion baht ($1.46 billion) debt relief program, under which the government will subsidize up to 60 percent of the costs of certain food and consumer goods for qualified Thai citizens and debt relief.
“With limited time and an unprepared budget by this government, in addition to being a minority administration, the government must urgently address the challenges currently facing the nation,” he told Parliament on September 29.
Yesterday, Ekniti announced that Thailand would spend 10 billion baht ($307 million) this month to buy up bad debts from households, in a bid to reduce its burden on the economy. In June, Thailand’s household debt ratio stood at 86.8% of GDP, one of the highest rates in Asia.