BANGKOK — Despite the friendly tone of a phone call between Thai Prime Minister Paetongtarn Shinawatra and Donald Trump earlier this week, his “Make America Great Again” economic policies are expected to have a significant impact on Thailand.
As the end of 2024 approaches, the Thai government is under increasing pressure to prepare for Trump, who will once again assume the US presidency in early 2025.
Dr. Thanawat Polvichai, President of the College of Thai Chamber of Commerce and Chairman of the Economic and Business Forecasting Center, has outlined the potential impact of Trump’s policies on the Thai economy and export trends for 2025.
These include increasing tariffs on Chinese imports by 60 percent, imposing a global tariff of 10 and adjusting trade balances with individual countries. He predicted direct impacts such as a weakened Thai baht and 3.106 billion dollars (approximately 10.714 billion baht) drop in Thai exports to the US, which corresponds to a 1.03 percent drop in total exports and a 0.59 percent drop in GDP.
Taking into account both the direct and indirect effects, Thailand’s export losses could amount to 160.472 billion baht, which would mean a 1.52 percent drop in total exports and a 0.87 percent drop in GDP.
Three Scenarios
The Thai Chamber of Commerce assessed the potential trade impacts under three scenarios:
- Base case: No US tariff increases in 2025. Thai exports are estimated at 302.477 billion dollars, which corresponds to growth of 2.80 percent.
- Worse case: A US tariff of 10 percent on Thai imports, coupled with a tariff of 60% on Chinese imports, reduces Thai exports to 297.892 billion dollars, a growth of 1.24 percent.
- Worst case: A US tariff of 15 percent on Thai imports, coupled with a tariff of 60 percent on Chinese imports, leads to a further decline in exports to 296.339 billion dollars and growth of only 0.72 percent.
In addition, there may be indirect effects, such as an influx of Chinese goods into the Thai market as China looks for alternative markets. Products such as machinery, furniture, electronics, metals and textiles could face increased competition in Thailand.
However, Thailand could also seize opportunities to expand its share of the US market, particularly in machinery, electronics, rubber products and toys, provided the country adapts and ramps up production to meet demand.
Five Key Strategies
Danucha Pichayanan, Secretary-General of the National Economic and Social Development Council (NESDC), has presented five key strategies for managing the Thai economy in 2024 and 2025:
The first priority is to drive continuous export growth while preparing to handle escalating trade barriers. This involves enhancing readiness to address the impacts of stricter trade protectionist measures, ensuring Thailand’s resilience in the global market.
Secondly, efforts will focus on protecting the manufacturing sector from market dumping and unfair trade practices. Key measures include: Strengthening quality controls for imported goods, expanding mandatory product standards to cover more imports, promoting international agreements for mutual recognition of standards, and enforcing stricter penalties for importing non-compliant goods.
In addition, the government plans to improve oversight of foreign e-commerce operators by requiring them to register as legal entities with offices in Thailand to ensure compliance. Tax laws for foreign online sellers and platforms operating in Thailand will also be updated. The authorities will closely monitor and combat market dumping, unfair trade practices and illegal import activities that exploit loopholes in the law.
Third, to boost private sector investment, Thailand will prioritize boosting the confidence of foreign investors. This includes: leveraging Thailand’s status as a regional hub and infrastructure readiness to attract foreign direct investment, especially from companies relocating due to trade restrictions.
This includes promoting the rapid implementation of approved investment projects from 2022-2024 to boost the high-potential manufacturing and service sectors, as well as accelerating infrastructure projects and the development of strategic economic zones according to the planned timetables.
Thailand also aims to create a favorable ecosystem to attract target industries and services and increase production efficiency through advanced innovation and technology.
“Government investment will play a crucial role in mitigating the impact of trade barriers in the coming year, with efforts to accelerate disbursements and propose additional investment plans to stimulate the manufacturing sector, especially construction and industrial activities.”
The fourth strategy, the government will focus on supporting farmers and adjusting agricultural production:
- Accelerating damage assessment and relief efforts to provide immediate assistance to affected farmers.
- Prepare for climate variability, especially during La Niña events, by managing water resources and improving infrastructure and early warning systems.
- Boosting the growth of agricultural exports and processed agricultural goods to support domestic prices as production increases.
- Promote awareness and acceptance of area-specific crop production and shift to high-value agricultural production.
Fifth, support for small and medium-sized enterprises (SMEs) will consist of increasing their liquidity, improving their production capacity and increasing their competitiveness. At the same time, the government will continue to restructure the debt of households and companies, especially for vulnerable groups with small amounts of credit and a high proportion of non-performing loans (NPLs).
Looking ahead, Thailand faces growing economic risks, making early preparation essential to navigate the challenges arising from shifting global trade dynamics effectively.
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