Dr. Pipat pointed out that the US is introducing mandatory labor tariffs under Section 301, proposing a 12.5% tax on Thailand. He warned of the need to prepare for a multi-layered new tax system, or the "Cliff Effect," and viewed the challenge not only as tariff negotiations but also as the impact of bilateral agreements on the economic structure.
3 Jun 2569 Dr. Pipat Leungnarumitchai, Chief Economist, Kiatnakin Phatra Financial Group Revealed via Facebook by “Pipat Luengnaruemitchai,” the post states that the US trade measures regarding forced labor under Section 301 are the first challenge Thailand must face. In the past, US trade policy under the Trump administration faced legal obstacles when the Supreme Court ruled in February 2568 that reciprocal tariffs levied under the IEEPA were unconstitutional. This resulted in a temporary reduction of the tariffs faced by Thailand to only 10% under Section 122. However, Section 122 has legal limitations, being valid for only 150 days (and the court could overturn it again), and will expire around July 24th of this year.
The United States is beginning to build a stronger new tool through investigations under Section 301 of the Trade Act, which has no tariff ceiling and no expiration date. Thailand is currently facing two such investigations simultaneously.
first story An investigation launched on March 11th concerns excess manufacturing capacity. The U.S. is investigating 16 countries, including Thailand, regarding policies that support overproduction, negatively impacting U.S. industries. Targeted products include electronics, chemicals, machinery, and plastics. Tariff rates have not yet been announced, but they are designed to replace Section 122 after its expiration and could potentially return to levels close to 36% for Thailand.
Second story The investigation, which began on March 12th, concerns forced labor, and the results were just announced today, June 2nd.
The results of the investigation into forced labor.
The USTR announced that Thailand is one of 54 countries that do not have domestic laws prohibiting the import of goods produced using forced labor, which is considered unfair trade practices against the United States. They proposed imposing an additional 12.5% tariff on all Thai exports except those on the Annex A list.
Whether it's a coincidence or not, all 15 countries with a trade surplus with the United States are on this list. Just a 10% or 12.5% increase in these surpluses might raise suspicions that the US is using this measure to replace reciprocal tariffs.
The good news is that Thailand's main export products, all electronics, are exempt, including HDDs, computers, semiconductors, smartphones, and displays. This exemption is consistent with previous retaliatory tariff measures, reflecting the continued reliance on the U.S. for electronics supply chains in which Thailand plays a crucial role.
Products actually affected include processed seafood (tuna, shrimp), rice, canned food, processed rubber products, clothing, and certain types of automotive parts. These are products with significant export value to the United States, but their impact is far less substantial than that of electronics.
The solution is clear: countries that have committed to enacting laws prohibiting the import of forced labor products through bilateral agreements (ARTs) will receive a reduced tariff rate of 10%. Cambodia, Malaysia, Taiwan, and Indonesia have all already signed such agreements, while Thailand has not yet done so. The deadline for submitting written comments is July 6th, and a public hearing is scheduled for July 7th.
The Cliff Effect, July 24th
What is more worrying than the outcome of any single investigation is the fact that everything is converging at the same time. Section 122 expires around July 24th, the forced labor investigation is completed on July 7th, and the results of the overcapacity investigation are scheduled to be released around the same time. If both measures under Section 301 are enforced simultaneously on the day Section 122 expires, Thailand may face multiple layers of new taxes without a transition period.
This is just the first piece.
These two issues are just part of a larger picture. The U.S. has many more Section 301 investigations pending, covering digital issues, services, intellectual property, and more.
But more importantly, what the United States probably really needs is a comprehensive bilateral trade agreement (ART) that covers multiple issues simultaneously, including labor, the environment, market opening, and reducing dependence on Chinese goods. Countries that reach an agreement with the United States quickly will not only get lower tariffs, but also greater certainty and a more stable trade relationship.
For Thailand, the challenge lies not just in negotiating tariff reductions, but also in the fact that the ART agreement may come with liberalization conditions that will impact the economic structure in many dimensions, including agriculture, digital services, government procurement, and labor standards.
Some aspects may have a positive impact on the country's competitiveness, while others may have negative consequences for those who experience market liberalization.
The negotiations, therefore, are not just about taxes, but about defining the direction of Thailand's economic structure in the next decade and finding ways to adapt and mitigate the short-term impact…
Source: Facebook: Pipat Luengnaruemitchai
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