Free trade or free fall? Thailand struggles to keep up with Vietnam in US talks

Thailand is falling behind Vietnam in trade talks with the United States and could be forced to make tough choices if it wants to stay in the economic game, a top economist has warned.

According to international trade expert Somjai Phagaphasvivat, Thailand’s lack of wide-ranging free trade agreements (FTAs) is putting it at a disadvantage compared to Vietnam, which has deals with 27 countries and has slashed tariffs on most US imports to zero.

“Vietnam’s competitiveness is increasing because of its broad FTA network. Thailand may need to consider a similar approach if it wants to remain relevant.”

With fewer FTAs under its belt, Thailand is struggling to offer the kind of sweeping tariff cuts the US wants. Ongoing negotiations are focused on reducing tariffs on American goods to 0% where possible, but Bangkok’s room to manoeuvre is limited.

Somjai broke down the potential tariff changes into three tiers: goods taxed at the Most Favoured Nation (MFN) rate, goods taxed below MFN but not at zero, and those already eligible for zero tariffs, Bangkok Post reported.

He said tariff cuts should focus on products not produced domestically or only in small quantities to protect Thai industries.

But trade isn’t the only issue on the table. Somjai pointed to US President Donald Trump’s approach of tying security interests to economic deals, a strategy likely to continue under future administrations.

“The US is linking defence and trade as a way to extend its influence in Asia and counter China,” he said, citing reports of Washington eyeing a naval base in Phang Nga as a strategic post to watch over the Strait of Malacca.

Finance Minister Pichai Chunhavajira recently admitted that Thailand’s talks with Washington now have clear geopolitical overtones.

Somjai also warned that dropping tariffs too quickly could hurt local industries, urging negotiators to push for quotas, relaxed standards, or phase-in periods.

On top of tariff demands, the US is also said to be pushing Thailand to open up government procurement, allowing American firms to bid for Thai public contracts.