Thailand Scrambles to Avert Tariff Blow from Trump | Image Source: www.bloomberg.com
BANGKOK, Thailand, April 14, 2025 – As geopolitical winds recur under the new direction of US President Donald Trump, Thailand is in a delicate act of economic and diplomatic balance. Faced with the threat of a 36 per cent penal tariff on their exports, Thai officials are accelerating a multifaceted strategy that combines energy agreements, agricultural imports and silent military recalibrations in an attempt to maintain US favor. But bets are high, and the way to go is all but clear.
According to reports by Oilprice.com and The Diplomat, the Thai Minister of Finance, Pichai Chunhavajira, categorically excluded the use of the country’s foreign reserves to amortize any decline in potential US tariffs. Instead, he will meet with the Governor of the Bank of Thailand Sethaput Suthiwartnarueput Wednesday to coordinate a formal response to the imminent economic uncertainty created by Trump’s aggressive trade position. Its debate should focus on risk mitigation and alignment of monetary and fiscal levers to support Thailand’s trade risk economy, which remains vulnerable to US protectionism.
What caused the tension between Thailand and the United States?
All of this comes from President Trump’s statement on April 2, entitled “Day of Liberation”, when his administration threatened to set high tariffs on several Asian economies, citing massive trade deficits and unfair trading practices. For Thailand, this meant a 36% reciprocal tariff on goods sold in the United States, one of the most severe sanctions imposed on any nation. According to Bloomberg, the United States recorded a trade deficit of $45.6 billion with Thailand in 2024, leading to a review of bilateral economic relations.
The Thai government is not the only one opposed. Countries such as Indonesia, Pakistan, South Korea and India are trying to buy more American energy and goods in the hope of avoiding similar sanctions. But the case of Thailand is particularly complex, its economic future is deeply linked to exports, and its GDP growth has been lagging behind by regional pairs due to unresolved structural problems.
Is energy the key to escaping tariffs?
Thailand seems to be thinking. Minister Pichai announced his intention to increase imports of liquefied natural gas (LNG) from the United States over the next five years, including an existing agreement for one million metric tonnes in 2026 worth $500 million. According to Reuters, a new $600 million LNG import agreement is also being developed, along with other U.S. purchases of ethane valued at $100 million over the next four years. These agreements are strategic and aim to eliminate the trade surplus by showing Thailand’s goodwill towards US energy producers.
Energy diplomacy is now the main tool of the Thai kit. Like Indonesia’s $10 billion commitment to buy more U.S. oil and liquefied petroleum gas, Thailand benefits from its energy demand as a trading chip. But this approach also entails risks, linking economic policy too closely to the volatile dynamics of global energy markets.
Why is the defense missing from the official book of Thailand?
It’s the elephant in the room. Although it is a powerful lever in relations between the United States and Thailand, particularly in view of its historic military alliance, the Thai government has visibly avoided public debate on arms acquisition. The Thais The ruling party of Pheu, once an adversary of the army, now exists in an uncomfortable alliance with him. Its economic platform favours the problems of bread and butter on Big-ticket defense purchases, especially when such purchases may not resonate with the electorate.
However, as the diplomat pointed out, the Thai army quietly prepares a list of American weapons systems that could serve as a flea for negotiation in the upcoming talks. The Ministry of Defence is aware that the import of United States weapons could be an acceptable means of reducing the trade imbalance. However, past experiences, such as those of the United States, which rejected the request for a Royal Thai Air Force F-35 aircraft, reveal the complications of aligning defence acquisitions with diplomatic strategy.
What about Thailand’s strategic relations with China?
That’s where things get harder. Thailand has spent the last decade diversifying its defence portfolio, increasingly supporting Chinese weapons due to lower costs and lower political chains. This was not motivated by America’s mistrust, but by pragmatic concerns about efficiency and strategic flexibility. However, China’s growing presence in South-East Asia, both economically and militarily, has led some Thai leaders to discreetly reconsider its alignment.
The challenge is to thread the needle. Thailand does not want to antagonize China, its main neighbour and trading partner. But he doesn’t want to give up his American alliance too much either. According to The Diplomat, this act of balance could lead Thailand to consider expanding its current purchase agreement for Swedish Gripen E/F hunters in favour of more American variants of F-16, especially if this could help reduce tariffs. However, such a pivot could cause diplomatic relations with Europe and undermine Thailand’s credibility as a reliable partner.
Is this a short-term commercial tactic or a long-term adjustment?
This depends on the extent to which Thailand is willing to go to Washington to calm down. The purchase of more U.S. goods – whether LNG, livestock or even military equipment – could certainly save time. But it does not solve the underlying problem: Thailand’s high dependence on exports and its vulnerability to the unilateral economic movements of the major Powers.
In addition, linking politics to the transactional style of Trump diplomacy – where each relationship is weighed on a general book – advantage – Thailand in a precarious position. Trump’s return reigned over fears of a zero-sum trade policy, where even allies are treated as opponents unless they pay their dues. This leaves Thailand wondering: when does appeasement begin to cost more than confrontation?
Could this new form be Thailand’s role in the region?
Maybe. If Thailand succeeds in crossing the tariff storm through diligent diplomacy and strategic procurement, it could become a model for other middle-level economies and relations with the United States and China. However, this would require a clear reassessment of its long-term business strategy, defence position and geopolitical alliances.
Thailand’s approach is now essentially reactive. There is no coherent framework for explaining how energy imports, agricultural associations and defence acquisitions fit into a broader perspective of their international relations. Without that clarity, Thailand could rely too much on compromise agreements that offered short-term relief but left the country strategically vulnerable.
And there’s another turn. As the diplomat pointed out, Trump is also pushing Europe towards greater defence independence. If this trend continues, countries like Thailand can be courted by a third axis of global policy, which does not require loyalty in exchange for access. This could open new doors – or close the old one – according to the wisdom with which Thailand plays its cards.
Meanwhile, Thai officials are finalizing their list of economic proposals for the Trump team, which is expected to be unveiled at the next talks in Washington D.C. These include reducing import duties on more than 100 U.S. products, strengthening transshipment controls and increasing investment in U.S. agriculture and energy. But the defense, although absent from the public script, is hidden at the bottom as a potentially powerful wild.
Thai economic diplomacy has rarely been so urgent or so complicated. With little margin of error, the leaders of the nation must carefully calibrate each movement to avoid alienating any of the two great powers of the world. In this high-performance geopolitical chess game, Thailand plays on both sides, not to win, necessarily, but simply to survive.
