Shock, chaos and negotiations behind the Thailand Trade deal

When US President Donald Trump released his dramatic declaration on April 2, no place was greater than in Southeast Asia, a region based on the entire world and his economic model for exports.

These fees rose to 49 % on some countries, as a group of industries of electronics exporters in Thailand and Vietnam beaten to chips in Malaysia and clothing factories in Cambodia.

“I remember to wake up in the morning. It was very early, and his vision was standing there in the White House garden with his painting. I thought:” Did you see this true? 36 %? How can it be? “Richard Han, who founded his father’s accurate electronics, says one of the largest contracts manufacturers in Thailand.

Thailand, which was facing a 36 % tax, now has a deal, like most of its neighbors, to reduce the definitions to 19 %.

The negotiations went to the wire, and it ended just two days ago from the deadline set by Trump – August 1. It has been a process fraught with the arrival there, and there are still few details about exactly agreed.

The ten goods were exported in the Southeast Asian Nations Association, as in the Southeast Asian bloc, at a value of $ 477 billion (360 billion pounds) to the United States in 2024. Vietnam is so much that the exposed economy, and export it to the United States, which total $ 137 billion, represented by about 30 % of GDP.

It is not surprising, then, the Vietnamese government for the first time is outside the bloc to negotiate with the United States, and the first in the region connects a deal to reduce the Trump punishment rate by 46 %.

According to the American President, The deal reduces definitions to 20 %, While he claims that Vietnam will now impose any tariff on any imports from the United States. Whoever looks, the Vietnamese leadership was less than the deal.

There are no details, there are no written or signed documents, and some reports indicate that Vietnam does not agree with Trump numbers. But they put the tape for other countries in the region.

Indonesia and the Philippines followed deals that reduce the tariffs of definitions to 19 %, although any country does not depend much on exports to the United States.

Thailand exports a lot to the United States. Last year, they got more than 63 billion dollars, or about five exports. Thailand should also be at the top of the waiting list in Washington, as it begged to reduce the tariff that was set by 36 % of Trump.

But Thailand is not Vietnam, a unilateral communist state where critical decisions can be made quickly by a few leaders, with little need to worry about companies or public.

Instead, such as South Korea and Japan, whose deals came after many quarrels despite being strong American allies, Thailand must also deal with local policy and public opinion. Thailand also has a weak and institutional coalition government, owned by a group of acquired interests.

Worse, the decisions made that were not completely related to the trade angered the American side.

In February, 40 asylum seekers in Ouigur who suspended in Thailand for more than a decade to China were sent and challenged US Secretary of State Marco Rubio. A BBC Thai commercial official said that American negotiators are still raising Ouigors as a complaint about tariff talks in May.

Then the regional army commander filed a complaint with Sis Majesty against an American academic, which led to his imprisonment and then forced to leave Thailand. So, out of being in the foreground, Thailand found itself at the back of the waiting list.

The other difficulty facing the Thai trade team was what the United States required in exchange for reducing the tariff rate, especially reaching the agricultural market in Thailand, which heavily protects.

Food is the big business in Thailand. The CP group, one of the world’s agricultural business giants, is the largest company in the country. This American request was painful for Thailand.

“Vietnam opened the Bandura Fund,” says another Thai commercial official. “By offering a zero percent tariff for all imports in the United States, it makes it difficult for those who cannot easily open all sectors in the American competition.”

Three hours drive from Bangkok, in Nakhon Nik, Worawut Siripun maintains 12,000 boys – an important work in Thailand; Thai eat a lot of pork. He is active in the Thai pigs Raiser Association, and was pressing against the elimination of definitions on American pork.

“We produce American farmers on a large scale of us, and their costs are less. Therefore, the price of pork will be less, and local farmers will not be able to stay.”

Access to the agricultural market was also a point attached to negotiations with Japan, which sought to protect rice farmers, and is still one of the main obstacles with India.

In Thailand, it is assumed that agricultural business giants such as CP were pressuring us on our demands to open other sectors such as poultry and corn. There were intermittent meetings between the commercial team and the cabinet ministers after each of the tariff talks in Washington, as BBC understood.

On the other hand, there are Thailand manufacturers, who represent a much greater contribution to the gross domestic product of agriculture. They strongly needed a deal.

“If we get 36 %, it will be terrible for us,” said Suwanpimolkul, Deputy Managing Director of SK Polymer, before announcing the deal. The company manufactures a confusing group of components of rubber and artificial materials, for washing machines, refrigerators and air conditioners.

“I guarantee that you will find at least one of our products in your home,” he said.

SK Polymer was founded by SuParp and his two brothers in 1991. His story is the modern story of Thailand, which grew up from the small family business of their father, but the explosive growth of global trade that was the basis of Thailand’s economy.

It is an integral part of the complex supply chain, as its products join other components of multiple countries to make consumer, industrial or medical goods for export. About 20 % of the company’s income comes from the United States, but the number is much higher when products that contain their components are included. Trump’s tariff has cast a key in business.

“We have small margins,” said SuParp. He said they could still manage the customs tariffs of up to 20 % or even 25 % by reducing costs. When he spoke to the BBC, before announcing the deal, he said that uncertainty was the biggest challenge: “Please – for our government, just get the deal, so that we can plan our business.”

20 % tax is also palatable to electronics manufacturers, a large industry in Thailand.

“If all of it in this region ends with about 20 %, Mashtir will not search from two alternative suppliers – it will be just a tax, like a value -added tax, for American consumers,” says Richard Han, CEO of Hana Microelectronics. The company makes the basic ingredients that enter everything in our digital life: printed circuit boards, integrated circuits, and RFIDs for pricing.

Mr. Han says only about 12 % of his products go to the United States directly, but like SK Polymer the percentage that is indirectly running, as part of other manufactured goods, much higher. But it is not only the tariff number that worries it.

His interest is a shipment, the US charge that China avoids tariffs by directing its production across Southeast Asia. Indeed, according to President Trump, it will pay 40 % – twice the rate of customs tariffs – on American goods to be charged.

Thailand and Vietnam have witnessed a significant increase in foreign investment after imposing a customs tariff on China in the first Trump period, and its exports to the United States also rose. Some of this was Chinese companies transporting production; Some were products that used a lot of Chinese Chinese ingredients. They are not only from China.

In another electronic factory, SVI, robots have slipped up and down the assembly line, bringing hundreds of small ingredients to collect circuit boards in machines that cost hundreds of thousands of dollars. A quick look at stickers showed that the ingredients came from Malaysia, the Philippines, Taiwan and China.

SVI makes security cameras, detailed loudspeakers, and medical equipment, to any specifications for their customer specifications, who are mainly in Scandinavian countries, they want. Thailand’s biological manufacturing sector is part of the very complex global supply chain, which is almost impossible to rearrange the demands of the US President.

Under the rules of the World Trade Organization, the product is considered locally if at least 40 % of its value is added in the local manufacturing process, or if it is “largely converted” into a new product, the method in which iPhone becomes different as soon as it is assembled.

The Trump administration does not push the World Trade Organization rules, and it is not clear what will be considered by shipping, but Mr. Han is afraid that this might prove a greater problem for Thai companies than the standard tariff rate if the United States insists on local components or less than China.

“Southeast Asia is strongly dependent on China,” he explains. “China, to a large extent, has the largest supply chain for electronics and many other industries, and it is cheaper.

“We can buy materials from another part of the world. It will be much more expensive. But it will be almost impossible for Thailand, Vietnam, the Philippines or Malaysia to get a very high threshold, for example 50-60 %, made inside this country. If this is the case to obtain the American origin certificate, no one will get the certificate of origin.”

Currently, very few of these details have been revealed. Although President Trump claims that he had a zero percent tariff for American goods coming to the Philippines and Indonesia, both countries said this is not true, and there is still a need to negotiate this.

For the Thai government, after it started very late, and struggled to meet our demands, obtaining a deal will be a relief.

They will worry about how to make the deal work later, where the details are placed, which usually takes years. Thus, they are far from alone – the rich and developing economies alike are scrambling to keep pace with the mercury tariff policy of Trump.

“At some point, this should stop. Certainly it should stop?” Mr. Han says. “The problem is that we do not know what the rules of the game will be, so we all volunteer, just wait to learn how to play the new game.”