Trade talks between Thailand and the United States aimed at lowering tariffs on Thai exports have stalled after Washington pressed Bangkok to recommit fully to the Kuala Lumpur Accord, the regional trade framework Thai officials have been reluctant to implement without amendments. The impasse lands at an unusually consequential moment: the 10% tariff imposed under Section 122 of the Trade Act of 1974 is due to expire on 24 July, and the Trump administration has not said whether it will let the measure lapse, renew it, or fold its function into the country-specific tariffs permitted under Section 301.
The stakes for Southeast Asia are uneven by design. Singapore continues to face the baseline 10% rate, while several of its neighbours are assessed at up to 40%, producing one of the widest tariff spreads applied to any single region under the current US framework. Thailand sits closer to the higher end of that range in the absence of a finalised agreement, a position Thai trade officials had hoped to renegotiate before the Kuala Lumpur dispute resurfaced.
A month of overlapping deadlines
July was already shaping up as a pivotal month for US trade policy, according to trade lawyers tracking the changes, with the Section 122 expiry running alongside pending Section 301 findings and a possible second phase of Section 232 semiconductor tariffs. Southeast Asian exporters of electronics components, several of which supply chip packaging and assembly capacity to larger manufacturers in Taiwan and South Korea, are watching the Section 232 review closely, since a broadened scope would reach further into the supply chains that have shifted toward Vietnam, Malaysia and the Philippines over the past two years.
India, while outside the ASEAN bloc, illustrates how costly an unresolved negotiation can become. The country faces an effective tariff rate of 36% in the absence of a trade deal, among the highest applied to any major economy under the current system. The Reserve Bank of India has responded in part by cutting its policy rate by 125 basis points since the tariff dispute began, taking it from 6.50% to 5.25%, a move made possible by inflation running near 2%, its lowest level in 47 years.
Beijing's slower growth cushion
China, the region's largest exporter, has set its 2026 growth target at 4.5–5.0%, the lowest official target since the early 1990s, even after export outperformance added more than $1 trillion to the country's trade surplus over the past year. That combination of a lowered growth target and a still-swollen surplus leaves Beijing with less room to absorb a further tariff shock than the headline export numbers suggest.
Thai negotiators are due to resume contact with US counterparts before the Section 122 deadline, though no date has been confirmed. Officials in Bangkok have not said whether they will accept the Kuala Lumpur Accord's terms without amendment or continue to hold out for a separate bilateral arrangement.