Thailand is in deeper trouble among its peer group in view of United States President Donald Trump's tariff offensive. Yet senior Thai officials appear nonchalant, complacent and smug. They seem to think Thailand will come out of the US tariff war in good shape as the Trump administration will prove unable to go through with its hefty import duties. The domestic political battle between the US executive and judicial branch -- with the Court of International Trade's injunction this week on most of the Trump tariffs -- further adds to the absurd sense of security and false perception of Thailand's importance by Thai officials.
Prior to the controversial decision of the Court of International Trade, a small and relatively unknown bench in Manhattan where Mr Trump faced a criminal trial in April-May 2024, the "Liberation Day" tariffs on April 2 were put on a 90-day pause one week later. The pressing implication here is that the trade court in Manhattan deems Mr Trump to have exceeded his authority at the expense of the US Congress under the US International Emergency Economic Powers Act.
In other words, if there is really an economic "emergency", Congress, rather than the president, is the rightful constitutional authority to react and respond, in this case by regulating commercial policy. Mr Trump's invocation of emergency powers over "economic security" by way of executive orders and a unilateral imposition of broad-based "reciprocal" tariffs on just about all of the US's trading partners is thus disallowed, warranting an injunction.
The trade court was prompted by a handful of merchant plaintiffs who were adversely affected by the Trump taxes on imports. The wording of the court's ruling even mentioned that this was a decision for the wider US, not just for the few who filed the charge. But at the end of the day, these are the US's internal legal and constitutional matters. Its overly litigated political and judicial system may now go all the way up to the Supreme Court, the country's highest and final arbiter.
At issue for those outside the US is whether the Trump tariffs will be stopped, even reversed. The answer is an emphatic "no." As much as countless governments and peoples all over the world would wish for the Trump tariff nightmare to go away, it will not. And it would be foolhardy to think otherwise. If he does not get his way in one direction, Mr Trump will seek other ways. For example, the trade court's order reportedly does not cover the tariff-raising Section 232 of the Trade Expansion Act of 1962, which Mr Trump has invoked to erect his tariff wall. It is highly probable that the US tariff war under President Trump is here to stay.
Any smart government would want to keep negotiating its designated tariff line downwards, regardless of the trade court's injunction, ideally all the way to the 10% baseline, which is the new minimum. Doing so at this time, when Mr Trump faces a judicial pushback and a setback to his trade agenda, will show what the Trump team deems "good faith". If the April 2 tariff announcement is eventually nullified, it is likely that the Trump team will use some other legal and constitutional means to stick with them. At that time, they will likely take foreign government postures and efforts into account.
Since the 90-day pause started on April 9, there have been few "deals". The United Kingdom has been the first to reach an agreement, whereas other countries are still trying to gauge how to go about it. Part of the challenge is that the endpoints are unclear and undetermined. On the one hand, it is obvious that the US wants to address and eliminate its trade deficits with a range of countries, including Vietnam, Thailand, and Malaysia. These three economies make similar goods that are exported to the US market, their largest destination. The Trump government also wants to go after Chinese transshipments and diverted production through Southeast Asia and elsewhere. However, reducing the deficits by how much, for how long, and over what products, as well as to what extent US trade partners need to disentangle from China, are two big question marks.
Given this uncertain and volatile trade environment with the US, the Thai government has taken a "wait-and-see" approach. But on closer scrutiny, it's less waiting and seeing than dithering and being ill-prepared. Deputy Prime Minister and Finance Minister Pichai Chunhavajira, who spearheads the Thai team on the Trump tariffs, has already postponed tariff-negotiation trips to Washington twice, belying the wait-and-see excuse. With a 36% tariff designation, compared to Vietnam's 46%, Indonesia's 32%, and Malaysia's 24%, Thailand has to make sure its tariff lines are ultimately competitive among its peer group.
Yet senior Thai officials have not had access to talks with the offices of the US Trade Representative (USTR) and the Commerce Department. While Vietnam, Malaysia and other Asian countries, including Cambodia, have held tariff talks with US counterparts, Thailand is being shunned in Washington, not just by the USTR and commerce secretary but also the State Department, the National Security Council at the White House, and Congress. At a major Thai-US investors and business conference in Bangkok last week, neither the USTR nor the commerce secretary was willing to send opening and goodwill remarks virtually, via a pre-recorded video or prepared statement.
Thailand is in big geopolitical trouble in Washington over the Uyghur deportation in February and the political persecution since early April of Paul Chambers, an American academic. These two issues come up before tariffs whenever Thailand pops up on the US policymaking radar screen. Yet the Thai government seems impervious and unwilling to own up to them, including apparent US visa bans on the senior-most Thai officials.
Some conservative types in Bangkok believe Thailand can simply seek China's support as an alternative. The problem is that China competes with Thailand for US market access. China is not a net buyer of Thai goods, but in fact dumps its products in the Thai market. Currently, Thailand holds a US$45.6 billion trade surplus with the US and a trade deficit of $19.2 billion with China. I will elaborate on Thailand's lost geostrategic balance between the US and China and how to get it back in the next column.