Thailand seeks to head off US tariffs with trade proposal

By Kitiphong Thaichareon and Thanadech Staporncharnchai

BANGKOK, June 18 (Reuters) - Thailand held trade talks with the United States on Wednesday and plans to submit a proposal on Friday, a top commerce ministry official said, as tariffs pushed industrial sentiment to an eight-month low.

Washington has threatened to impose a 36% tariff rate on imports from Thailand if a reduction cannot be negotiated before a 90-day pause that caps tariffs at a baseline of 10% for most nations expires on July 9.

"We held discussion with USTR for two hours this morning," Permanent-Secretary Vuttikrai Leewiraphan told reporters, adding the United States highlighted five issues including tariffs and quotas, non-tariff barriers, digital trade, origin of goods and economics and security.

"On Friday, Thailand will submit an initial proposal to address these issues that includes reducing tariffs, purchasing more U.S. goods and increasing investments," he said.

The talks come as industrial sentiment in Southeast Asia's second-largest economy fell for a third consecutive month due to concerns about tariffs, according to the Federation of Thai Industries.

Thailand's proposal should be of interest to the United States and the negotiations, if not concluded, are expected to continue beyond the 90-day window, Vuttikrai said.

The United States was Thailand's largest export market last year, accounting for 18.3% of total shipments worth $55 billion. Washington has put its trade deficit with Thailand at $45.6 billion.

The trade talks come as Thai exports rose by their fastest annual rate in more than three years in May, beating expectations after shipments to the United States soared, driven by accelerated shipments before the tariff pause expires, the commerce ministry said in a statement.

In the first five months of 2025, exports, a key driver of the economy, rose 14.9% from a year earlier, it said.

In May, exports to the United States jumped 35% from a year earlier, while shipments to China rose 28%, government data showed.

"We hope export growth will exceed 10% this year," Commerce Minister Pichai Naripthaphan told a press conference, saying the weaker Thai baht THB=TH would further support shipments.

May exports THCEX=ECI jumped 18.4% from a year earlier to a record $31 billion, compared with 6.7% increase expected in a Reuters poll.

"We hope export growth will exceed 10% this year," Pichai said, adding that the sector will be "a hero" for the economy and he expected upcoming trade talks with the United States to go well.

On Monday, Pichai said both countries could agree good terms on tariffs, possibly as low as 10%.

Exports of computers and parts surged 104% in May from a year earlier, while shipments of agricultural goods rose 6.8%. Rice export volumes dropped 0.2% on the year.

Last month, imports THCIM=ECI increased 18% from a year earlier, beating a forecast rise of 13.1%, which led to a trade surplus THCTR=ECI of $1.12 billion for the month.