Thailand has become the second Asian nation to promise to buy more U.S. energy commodities in a bid to avoid tariffs in as many days. Vietnam earlier this week did the same as import tariffs loom over all U.S. trade partners that have a surplus with Washington.
The Thai government has estimated that an additional import tariff of 11% from the United States would lead to a hit of $8 billion for the state coffers, Bloomberg has reported, which motivated the decision to commit to more energy buying.
The move follows Vietnam’s decision to reduce its own import tariffs in anticipation of the U.S. tariff push. Imports that will see reduced import levies include liquefied natural gas, cars, ethanol, wood products, and various foodstuffs. For LNG, the import tariff rate would be reduced from 5% to 2%, while the tariff on imported cars would be slashed from 64% to 32%. Ethanol tariffs would be reduced from 10% to 5%.
Vietnam has the third-highest trade surplus with the United States, at $123.5 billion for 2024, after only Canada and China. Thailand’s trade surplus with the U.S. is slimmer, at $45 billion for 2024, but it is still a surplus. The top Thai exports to the U.S. are electronics, machinery, and food.
Trump’s choice of enforcing tariffs to make up for trade deficits has already spurred many U.S. trade partners in Asia into action with regard to energy imports. The U.S. president has expressly stated that a substantial increase in energy imports from the world’s largest producer would be a positive development, and countries including Japan, South Korea, India, and Taiwan have responded favorably.
The effect of the tariffs has been quite bullish for oil and gas prices internationally, which is not surprising, but many observers believe the ultimate effect on trade in general would be bearish. Trump is set to officially announce the tariffs today.
By Charles Kennedy for Oilprice.com
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