Potential US tariffs on Thai rice imports may open doors to other Asian destinations

Potential US tariffs on Thai rice imports could prompt buyers toward less expensive fragrant rice alternatives from Vietnam or Cambodia, market sources said March 19.

While US President Donald Trump has not said he would enact tariffs on Thai rice, among other imports from the country, market sources in the US say this remains a possibility.

Thailand is the largest supplier of rice to the US, exporting 786,582 mt of milled rice in 2024, up from 729,982 mt in 2023.

Currently, the US has a 1.4-cent/kg tariff on all imported milled jasmine and long grain rice.

Market sources said that higher tariffs on Thai rice could have two main effects: first, importers might buy more Thai rice now to prepare for the price increase, but later, they may switch to cheaper options like Vietnamese or Cambodian rice.

Wanniwat Kitireanglarp, deputy secretary general of the Thai Rice Exporters Association, said higher tariffs on Thai rice imports to the US will lead to a shift in buyers' preference. He said the effect will be in two stages.

"In the first stage — the panic phase — importers may have already increased their orders, importing more than usual to prepare for the tariff hike," he said. "As a result, our export figures for the first half of the year may not be affected and could even increase to balance out potential losses in the second half."

The second stage, once the tariff is applied, he said, Thai rice will be the most affected, Kitireanglarp said.

"Over 70% of the rice imported into the US is Thai Hom Mali rice, priced at an average of $900/mt or higher," he said. "Compared to cheaper rice from Vietnam or Cambodia, the impact of the tariff on our higher-priced product will be greater. It will definitely cut out our opportunity to grow in the US market. However, it's important to note that Thai rice can't be fully replaced by local US rice. Many restaurants currently using Thai rice may reconsider due to their price sensitivity, potentially opening up opportunities for more affordable Vietnamese fragrant rice."

In contrast, US sources seem skeptical that any proposed tariffs will have an impact on rice.

"I do not think that if the prices of rice were to increase, it would have much impact on the consumer," a miller said. "The reason being is that is a cheap commodity and therefore its affordable. So, if the US does implement tariffs on Asian origins rice, the consumer will pay the increased price as they believe that Asian rice is a premium compared to the US grown rice."

Platts, part of S&P Global Commodity Insights, assessed Hom Mali 100% Grade B at $929/mt FOB FCL March 19, up $19/mt on month, reflecting demand from Europe and US.

A Thai market participant said he doesn't anticipate an immediate shift in buyer preferences and there appears to be little change in eating habits, as the Asian population in the US will continue to consume rice. While buyers may opt for more affordable fragrant rice options like Vietnam's DT8 5% — similar to how Ghana transitioned from Thai Hom Mali rice to the Vietnamese variety.

This was supported by a source in the US which mentioned that US consumers have very traditional eating habits and are unlikely to sway from this.

"From a young age, we are taught which brands are deemed good quality and we often purchase the same brand without really knowing the difference between the other brands," the source said. "Consumers in the US are loyal to the brands. Therefore, regardless of price fluctuations, consumers are most likely to stick with the same brand."

The source added that fragrant rice can't compete with US-grown rice. The tariff is expected to hurt consumers, but the market for fragrant rice is unlikely to collapse. The source believes that Thai Hom Mali prices could see a discount of up to 10% as the tariff may put pressure on prices, leading to a decline in export prices.

A Vietnamese trader said Thai Hom Mali exports to the US are in decent volumes. However, if the US imposes a tariff on Thai rice, it could be substituted with Cambodian fragrant rice.