Thai Prime Minister: We will negotiate with the United States on a 36% reciprocal tariff, and we are ready to take countermeasures

‌Background: The trade earthquake caused by the 36% reciprocal tariff‌

On April 3, 2024, Thai Prime Minister Petunthan Shinawatra held an emergency press conference to respond strongly to the US Department of Commerce's announcement of a 36% "reciprocal tariff" on Thai auto parts, rubber products and other goods exported to the United States. The US claimed that this move was aimed at correcting Thailand's "unfair agricultural subsidy policy", but in fact it was aimed at Thailand's rise in the electric vehicle industry chain, semiconductor packaging and testing and other fields - Thailand's exports of high-tech products to the United States surged by 42% in 2023, with hard disk drives accounting for 58% of the global market share. Petunthan announced three countermeasures: restructuring the import tax structure on the United States, setting up an inter-departmental negotiation working group, and launching emergency consultations with RCEP member countries. This tariff offensive and defensive battle is not only about the bilateral trade between Thailand and the United States (annual scale of about US$45 billion), but also reflects the survival wisdom of the Southeast Asian manufacturing hub in the fission of globalization.

‌Structural fragility and countermeasures: Thailand’s double dilemma‌

‌Scan of damaged core industries‌

‌Automobile manufacturing‌: accounts for 22% of Thailand's total exports, and the US market consumes 30% of its tires and 15% of its gearboxes. The 36% tariff will lead to the loss of about 87,000 jobs, and multinational automakers such as Toyota and Ford have threatened to transfer production capacity to Vietnam.

‌Rubber Industry Chain‌: As the world's largest natural rubber producer (accounting for 35% of production), the US tariffs directly affect US$1.2 billion in exports, and also impact 2,000 downstream small and medium-sized enterprises such as medical gloves (accounting for 60% of global supply) and automotive seals.

‌Asymmetric Countermeasures Library‌

Agricultural Product Leverage: As the fourth largest source of rice imports to the United States (300,000 tons per year), Thailand plans to increase its import tax on U.S. wheat from 5% to 25%, impacting the Southeast Asian supply chains of companies such as McDonald's and Budweiser.

‌Digital Service Tax Weapon‌: In response to the current situation where American companies such as Google and Meta have annual revenue of more than US$5 billion in Thailand but pay almost no tax, the Digital Economy Fair Tax Act is planned to be introduced to retroactively collect unpaid taxes since 2018.

‌Geo-hub value‌: Using the Kra Canal plan connecting the Indian Ocean and the Pacific Ocean (feasibility study has been launched), it is hinted that the waterway concessions may be opened to Chinese companies on a priority basis to put pressure on the US geo-interests.

‌Flexible Game Theory: The Shinawatra Family’s “Tai Chi” Negotiation Philosophy‌

Petuntan's counter-measures clearly inherited his family's political legacy (his father Thaksin and his aunt Yingluck were both former prime ministers), and he demonstrated the Southeast Asian-style game wisdom in combining firmness with flexibility:

‌1. The legal battle and the public opinion battle are intertwined‌

Citing the "Right to Development Exception Clause" in Article 12 of the Regional Comprehensive Economic Partnership (RCEP), the United States accused the US tariffs of violating regional free trade commitments and has joined Malaysia and Indonesia in preparing to file a class action lawsuit with the WTO.

It launched a "grassroots diplomacy offensive" and released a documentary video on the impact of American genetically modified soybeans on Thai farmers through platforms such as TikTok. It was played 230 million times in two weeks, forcing agricultural state lawmakers of the Biden administration to soften their stance.

‌2. Precision deterrence of the industrial chain‌

In the semiconductor field, the Electronic Industries Association of Thailand (EIA) announced that it would implement export reviews on U.S. chip manufacturing materials (such as wafer carriers and etching gases). This move will affect the production progress of Micron Technology and Applied Materials' US$5 billion investment project in Thailand.

The tourism service industry has jointly exerted pressure and plans to impose an additional "ecological protection fee" of 2,000 baht (about 55 US dollars) on American tourists. This is estimated to reduce the source of high-end customers by 15%, impacting the regional revenue of hotel groups such as Marriott and Hilton.

‌3. Multilateral hedging mechanism‌

Accelerate the promotion of the "Thai Baht-RMB local currency settlement system", increase the proportion of bilateral local currency settlement between China and Thailand from 29% in 2023 to 40%, and weaken the sanctions effectiveness of the US dollar settlement system.

Promote the "Critical Mineral Mutual Assistance Agreement" within the ASEAN framework, combine Indonesian nickel mines and Malaysian rare earth resources to build a "de-Americanized" new energy supply chain, and directly attack the battery raw material weaknesses of Tesla and General Motors.

‌ASEAN chess game: small and medium-sized economies’ “grouping together for warmth” experiment‌

Thailand's countermeasures are by no means isolated actions. Its strategic design is deeply intertwined with the regional integration of Southeast Asia:

Supply Chain Restructuring: Signed a Memorandum of Understanding on Joint Construction of Cross-Border Industrial Parks with Vietnam, allowing companies affected by tariffs to transfer semi-finished products to Vietnam for assembly and export at zero tariffs, and use the latter's average tariff rate of only 4.7% on exports to the United States to "save the country in a roundabout way."

Financial safety net: Expand the Chiang Mai Initiative Multilateralization funding pool to US$300 billion, prepare to provide member countries with special liquidity support for trade wars, and weaken the IMF's traditional intervention model of attaching political conditions.

‌Breakthrough in the standard system‌: Under the framework of the ASEAN Advisory Committee on Standards and Quality (ACCSQ), establish the "ASEAN Quality Mark (AQM)" which is not recognized by the US FDA and the EU CE certification to cultivate regional technological sovereignty.

‌The Awakening of the Global South: A Paradigm Revolution in Soft Power‌

Thailand's response this time shows a new paradigm of trade countermeasures for small and medium-sized economies: it does not focus on head-on tariff confrontation, but forms multi-dimensional deterrence through control of industrial chain nodes, innovation of regional mechanisms, and construction of cultural narratives. Compared with Brazil's legislative confrontation, Thailand is better at weaponizing "non-traditional bargaining chips" such as geo-hub value, tourism consumption market, and cultural soft power. This "four-two-pound" strategy provides inspiration for the Philippines (US semiconductor packaging and testing base) and Bangladesh (garment exporter): in the cracks of superpower games, medium-sized countries can reconstruct the game balance by activating implicit power resources.

Crisis and Turning Point: Reconstructing the Order on the Eve of the Asian Century

The current tariff war between Thailand and the United States coincides with the critical period of the "Asianization" of the global supply chain (Asian factories account for 52% of the added value of global manufacturing). If Thailand can transform the crisis into an opportunity to deepen regional cooperation, it may promote three historic changes:

‌Monetary sovereignty awakening‌: ASEAN’s internal local currency settlement system accelerates the replacement of US dollar hegemony

‌Technical Standard Independence‌: The joint R&D mechanism under the RCEP framework breaks through the Western patent wall

‌Innovation in governance model‌: The alliance of small and medium-sized countries reshapes the WTO reform agenda with "collective bargaining power"

As Supachai, dean of the Faculty of Economics at Chulalongkorn University in Bangkok, said: "When the 36% tariff tears apart the banner of free trade, Southeast Asian countries are using the wisdom of rattan weaving to repair the wounds inflicted by steel." This seemingly unbalanced contest may be nurturing the first ray of hope for the trade order in the post-hegemonic era.