Trump Tax Plan Targets Thailand as "Non-Reciprocal" Trading Partner

As the countdown continues to what Donald Trump has dubbed "America's Liberation Day" on 2 April, Thai officials are scrambling to assess the potential impact of the new US president's threatened tariff regime. 

A key White House document from Trump's first term, recently revealed by the Wall Street Journal, suggests Thailand could be particularly vulnerable to retaliatory measures.

The document, titled "The United States Reciprocal Trade Act: Estimated Job & Trade Deficit Effects", identifies Thailand as having "non-reciprocal tax policies" that place it firmly in the US crosshairs. 

According to Dr. Supavud Saicheua, chairman of Thailand's National Economic and Social Development Council, Trump's team may use this blueprint to determine specific tariffs on Thai goods, the Wall Street Journal reports.

Thailand currently ranks as America's 12th largest trade deficit partner, with the US experiencing a $US 19.3 billion shortfall in 2018. American exports to Thailand totalled $US 12.6 billion against imports of $US 31.9 billion – a ratio of 1:2.5, according to the White House analysis reviewed by WSJ researchers.

The assessment is particularly critical of what it deems unfair taxation practices. One striking example cited by the Journal is green tea, which Thailand taxes at 90% when imported from the US, while American tariffs on Thai tea stand at just 3%.

The document classifies Thailand among countries with "non-reciprocal tax policies", noting that Thailand imposes higher customs duties than the US on 2,881 product categories – representing 55% of all traded goods. 

By comparison, the US taxes only 27% of items at higher rates than Thailand, with 18% taxed equally, the WSJ analysis found.

While Thailand's absolute trade surplus with the US falls below giants like China, the EU and Japan, its tariff rates rank near the top of America's trading partners – second only to India, according to the Journal's review of the document.
 

The White House analysis presents two scenarios:

• If Thailand reduces import tariffs to match US levels, the American trade deficit would shrink by $3.2 billion (17%)
• If Thailand maintains current rates and the US retaliates with equivalent tariffs, the deficit would decrease by $6.4 billion (34%)

Meanwhile, neighbouring Vietnam, which also maintains a significant trade surplus with the US, has already moved to forestall potential sanctions by unilaterally cutting tariffs on American goods, the WSJ reports. 

Vietnam has slashed duties on certain vehicles from 64% to 32% and reduced taxes on liquefied natural gas from 5% to 2%. Agricultural products including apples, frozen chicken, almonds and cherries have also seen tariff reductions.

As Thailand weighs its options, the clock is ticking towards Trump's 2 April deadline.