What are the terms of Thailand's nearing US trade agreement?

Expected Agreement Signing

Thai Prime Minister Anutin Charnvirakul indicated that an Agreement on Reciprocal Trade (ART) with the United States is nearing completion, with a signing anticipated during US President Donald Trump's upcoming visit to Asia.

Speaking at a forum in Singapore on 7 October 2026, Mr Charnvirakul stated that negotiations were on "the last paragraph" and that he expected the final accord to be signed as early as November 2026.

Potential venues for the signing include the ASEAN Summit in the Philippines, scheduled for 16–18 November, which President Trump has confirmed he will attend, or the Asia-Pacific Economic Cooperation meetings in Shenzhen on 18–19 November, though Trump's attendance at the latter remains unconfirmed.

Mr Charnvirakul also mentioned receiving a letter from the US President last week, confirming the deal's advanced stage and instructing him to ensure final clauses were drafted by Thai officials and the United States Trade Representative (USTR).

Previous Tariff Reductions and Thai Commitments

The US is Thailand's largest export market, with US government figures showing imports of Thai goods totalled $91.3 billion in 2025. This agreement follows a period of heightened trade tensions. In April 2025, the US imposed a 36 per cent "liberation day" tariff on Thailand.

However, a framework for a reciprocal trade agreement, announced in October 2025, saw this tariff reduced to 19 per cent. In return, Thailand pledged to eliminate tariff barriers on approximately 99 per cent of goods, encompassing a full spectrum of US industrial, food, and agricultural products.

Furthermore, Thailand committed to increasing purchases of American energy, agricultural products, and aircraft, aiming to address its $71.7 billion goods trade surplus with the US.

Recent US Tariff Policy Shifts

Finalising the ART has encountered complications due to shifts in US tariff policy during 2026. The US Supreme Court struck down the "liberation day" tariff regime in February 2026. As an alternative, President Trump implemented a temporary 10 per cent global tariff under Section 122 of the Trade Act, which expired in July 2026.

Concurrently, the USTR initiated two Section 301 investigations in March 2026: one targeting 60 nations for alleged failures on forced labour and another examining excess industrial capacity in 16 major trading partners. Thailand was included in both probes, leading to a 12.5 per cent tariff imposition in June 2026 under the forced labour investigation.

The USTR has also cited Thailand for "structural overcapacity" in its automotive and parts, machinery, and rubber product sectors, with this investigation still pending conclusion.

Thailand's Objectives and Final Details

Despite these complexities, Thailand's Commerce Ministry has confirmed that the main substance and principles of the ART have been agreed upon by both nations. Technical teams are now tasked with resolving the remaining details and legal wording.

Thailand's objective, according to The Nation, is to maintain the eventual overall tariff burden at or below the previous 19 per cent benchmark, ensuring it remains competitive with other regional economies. The finalisation of the ART is expected to improve the US-Thailand trade relationship, which has been under strain from the prolonged negotiations.

Reports in August 2026, quoting an unnamed Thai official via Bloomberg, suggested Thailand considered using military cooperation as leverage in the talks, though the Thai government subsequently denied these claims.

Implications for Thai Exporters

The impending finalisation of the Agreement on Reciprocal Trade offers a clearer framework for Thai exporters, especially those in sectors previously affected by US tariffs.

For companies involved in industrial goods, food, and agricultural products, the ART's commitment to eliminating tariff barriers on approximately 99 per cent of goods could significantly reduce operational costs and enhance market access in the US.

However, businesses in the automotive and parts, machinery, and rubber products sectors should monitor the ongoing USTR investigation into "structural overcapacity," as this could introduce new tariff considerations beyond the ART.

The Commerce Ministry's aim to keep overall tariff burdens at or below 19 per cent will be a key metric for assessing the agreement's benefit, particularly in comparison to regional competitors' access to the US market. The specific wording of the final agreement, expected by November 2026, will determine the precise cost impact for these industries.