Substantive Agreement Reached on the Thailand–United States Agreement on Reciprocal Trade (ART)
Introduction
On 1 September 2026, Thailand and the United States reached agreement on the substance of an Agreement on Reciprocal Trade (the “ART”) in Washington, D.C. Technical details remain outstanding, and the ART has not been signed.
The tariff rate applicable to Thai goods is likewise unsettled. A Section 301 investigation into structural excess capacity remains before the United States Trade Representative (“USTR”), and the final rate will depend on its outcome.
The 12.5 percent rate now in force did not simply replace an earlier rate. It is the latest in a sequence of four measures, each resting on a different legal footing, and in each case the preceding measure ceased to apply because its statutory basis lapsed, was struck down, or was superseded by negotiation.
How One Measure Replaced Another
- Reciprocal tariffs under IEEPA: Thailand was subject to a reciprocal tariff of 36 percent imposed under the International Emergency Economic Powers Act (“IEEPA”). Following a joint statement with the United States, that rate was reduced to 19 percent, announced on 1 August 2025, which in turn led to the announcement of the ART framework on 26 October 2025.
- The Supreme Court ruling: On 20 February 2026, the United States Supreme Court held, by six votes to three, that IEEPA does not confer authority on the President to impose tariffs. The reciprocal tariff regime fell away, including the 19 percent rate applied to Thailand.
- Section 122: The United States then imposed a temporary tariff of 10 percent on all countries under Section 122 of the Trade Act of 1974. That authority carries a statutory limit of 150 days, and the measure expired on 24 July 2026.
- Section 301: On the same day, the USTR announced tariffs under Section 301 covering 60 trading partners. Thailand was placed in the 12.5 percent band under the forced labor case. Cambodia, Indonesia and Malaysia were placed at 10 percent, leaving Thai exporters with a cost disadvantage of approximately 2.5 percentage points against those regional competitors.
Each step rests on a different statute. A rate imposed under one authority is not comparable with a rate imposed under another, even where the percentage is identical.
Where the Rate Stands Now
Section 301 does not produce a single rate. It proceeds case by case, and the resulting rates accumulate.
- Case 1 — Forced labor: Determined, producing the 12.5 percent rate now in force.
- Case 2 — Structural excess capacity: Pending, no determination has been issued.
The Department of Foreign Trade (“DFT”) expects the two cases together to result in a combined rate of no more than 19 to 20 percent. With Case 1 at 12.5 percent, this implies approximately 6.5 percent from Case 2.
It is at this point that the two figures of 19 percent must be kept distinct. The 19 percent applied before February 2026 was a single reciprocal tariff imposed under IEEPA and no longer exists. A figure of 19 percent today refers to the two Section 301 cases taken together, under an entirely different statute. The same number denotes a different measure.
What Was Agreed on 1 September
The Deputy Prime Minister and Minister of Commerce met the USTR and the Deputy USTR in Washington, D.C. on 1 September 2026, following four days of technical negotiation conducted by Thailand’s representatives.
The parties agreed on the substance of the ART, and the negotiating teams on both sides were directed to finalize the remaining technical details. The ART addresses non-tariff barriers, digital trade, and commercial opportunities. The United States indicated that the rate arising from the pending Section 301 excess capacity investigation would be set at a fair and competitive level.
Why the ART Does Not Settle the Rate
The Ministry of Commerce (“MOC”) confirmed on 7 September 2026 that agreement on the substance of the ART does not fix the final tariff rate, because the Section 301 excess capacity investigation remains under consideration.
Two distinct instruments are involved:
- The ART is a bilateral agreement between Thailand and the United States.
- A Section 301 determination is a unilateral United States administrative process.
Concluding the former does not conclude the latter.
The two meet at a single point. The USTR set the Case 1 rate at 10 percent for economies that already prohibit imports of goods made with forced labor, that operate a partial regime having that effect, or that have committed through an ART to impose and enforce such a prohibition. Thailand satisfies none of these conditions and therefore remains at 12.5 percent.
What lowers the rate is the forced labor commitment that an ART carries, not the ART itself. An agreement without such a commitment would not qualify, and an agreement containing one would still leave Case 2 open.
What Remains Outstanding
Three matters remain unresolved.
- The Case 2 determination has not been issued, and no date has been announced. Until it is, the rate applicable to Thai goods is not fixed.
- The technical annexes to the ART have not been finalized, and the agreement has not been signed.
- The commercial terms of the ART have not been published. Commitments on imports of United States goods will bear on Thailand’s trade and current account balances.
Key Takeaways
- The tariff applicable to Thai goods has been replaced three times since 2025, moving from 36 percent and then 19 percent under IEEPA, to 10 percent under Section 122, to 12.5 percent under Section 301 to date.
- Rates imposed under different statutes are not comparable, even where the percentage is identical.
- Section 301 rates accumulate across cases. Case 1 (forced labor) produced the current 12.5 percent. Case 2 (excess capacity) is pending.
- A combined figure of 19 to 20 percent refers to both Section 301 cases together, and not to the former IEEPA rate of 19 percent.
- Agreement on the substance of the ART was reached on 1 September 2026. Technical details remain outstanding and the ART is not signed.
- An ART containing a forced labor undertaking would move Case 1 from 12.5 percent to 10 percent, but would not determine Case 2. Thailand remains at 12.5 percent, and the MOC confirmed on 7 September 2026 that the final rate awaits that determination.
Author: Panisa Suwanmatajarn, Managing Partner.
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