Proposal to reduce tariffs and boost U.S. trade to be submitted Friday
Thailand held critical trade discussions with the United States on Wednesday, aiming to avoid a steep 36% tariff rate threatened by Washington. Thai officials confirmed that a formal proposal will be submitted Friday, just weeks ahead of the July 9 deadline when the current 90-day tariff pause expires. Without a deal, most Thai goods could face sharply higher duties.
According to Commerce Ministry Permanent-Secretary Vuttikrai Leewiraphan, the U.S. outlined five key concerns: tariffs and quotas, non-tariff barriers, digital trade, origin of goods, and economic-security issues. Thailand’s upcoming proposal includes reduced tariffs, increased U.S. imports, and expanded investments to address these points.
Industrial sentiment weakens despite strong export growth
Concerns over trade tensions have pushed industrial sentiment in Thailand to an eight-month low, data from the Federation of Thai Industries showed. Still, Thailand’s export performance remains resilient. May exports surged 18.4% year over year to a record $31 billion, far surpassing the 6.7% gain forecast in a Reuters poll.
Shipments to the U.S. jumped 35%, reflecting front-loading ahead of potential tariffs, while exports to China rose 28%. Overall exports increased 14.9% during the first five months of 2025 compared to a year earlier. Commerce Minister Pichai Naripthaphan expressed confidence that annual export growth will exceed 10%, citing a weaker Thai baht as a tailwind.
Electronics, agriculture drive trade momentum
Thailand’s computer and parts exports surged 104% in May, while agricultural shipments rose 6.8%. Rice export volumes, however, edged down 0.2%. Imports rose 18%, outpacing the expected 13.1% increase, resulting in a trade surplus of $1.12 billion for the month.
Pichai said he remains optimistic about securing favorable terms with the U.S., potentially limiting tariffs to 10%. He also noted the trade sector would be the “hero” of the economy this year, with continued negotiations likely even beyond the July deadline if needed.
Fed Holds Rates Steady as Markets Watch Iran Tensions
Stocks mixed as investors weigh Fed outlook and geopolitics
U.S. markets ended mixed on Wednesday as the Federal Reserve held interest rates steady and investors remained cautious over potential U.S. involvement in Middle East hostilities. The Dow Jones Industrial Average slipped 0.1%, the S&P 500 closed just below the flat line, and the Nasdaq Composite gained 0.1%.
Earlier in the session, all three indexes had risen by around 0.6%, but momentum faded as geopolitical uncertainty and diverging signals from the Fed weighed on sentiment.
Fed keeps rates unchanged, reveals split in rate outlook
The Federal Reserve held its benchmark interest rate steady for the fourth consecutive meeting and released its updated Summary of Economic Projections. The median forecast sees the federal funds rate ending 2025 at 3.9%, implying two 25-basis-point cuts this year. However, officials were divided, with several expecting no cuts at all.
Fed Chair Jerome Powell emphasized the need to monitor inflation closely before committing to rate reductions. “What we are waiting for to reduce rates is to understand what will happen with the tariff inflation,” Powell said. “Ultimately, the cost of the tariffs has to be paid.”
Middle East tensions inject uncertainty
Markets remain on edge over escalating tensions in the Middle East. President Donald Trump declined to confirm whether the U.S. would join Israel in attacking Iranian targets, saying, “I may do it. I may not do it.” Iran has threatened retaliation if the U.S. crosses a red line, including potential missile strikes on American military bases in the region.
The geopolitical uncertainty has added volatility to global markets and contributed to swings in stock prices in recent sessions.
Oil prices steady amid geopolitical risks
Crude prices hovered near recent highs, supported by concerns over supply disruptions. Brent crude traded just above $76 a barrel, while West Texas Intermediate remained below $75. Both benchmarks have seen upward pressure amid the risk of regional escalation.