BANGKOK — The head of Thailand’s National Economic and Social Development Council (NESDC) has warned that the country is likely to be hit by new tariffs from Donald Trump as fears grow of a looming trade war that could impact both this year and next.
He emphasized that Thailand is facing complex economic challenges and that the “next step” should focus on investing in human capital and agricultural technology, as well as increasing competitiveness in the tourism and healthcare sectors.
Dr. Supavud Saicheua, Chairman of NESDC, delivered a keynote speech at the seminar “Prachachat Forum: NEXT MOVE Thailand 2025” hosted by Prachachat Business on March 26. He said that in addition to Thailand’s ongoing challenges, such as slow economic growth, declining competitiveness, low agricultural productivity, an aging society and shortages of labor and energy, a new problem will emerge on April 2, 2025.
The Trump administration is expected to announce reciprocal tariffs targeting various countries, including Thailand, on that date.
Significant Impact on Thailand
He pointed out that the US Federal Reserve has already revised its forecast for economic growth in 2025 downwards from 2.1 percent to 1.7 percent. If the world’s largest economy and the fastest growing among the industrialized nations has to lower its expectations, the impact on Thailand is likely to be significant.
The full impact of Trump’s proposed tariffs remains to be seen. A look back to the 1930s, when the US passed the Smoot-Hawley Tariff Act and imposed across-the-board tariffs of 20, resulted in a two-thirds drop in global trade, about 60 percent. Although a repeat of this scale is unlikely due to today’s more sophisticated monetary policy and better economic conditions, this episode serves as a historical warning.
Dr. Supavud stressed that Thailand will inevitably face impacts this year and next and must manage the situation as effectively as possible.
He also referred to Peter Navarro, Trump’s trade advisor, who has commented on Thailand in various contexts as part of the “Agenda 2025” policy document. The US has already worked out scenarios to calculate how imposing tariffs on Thailand, at the same level that Thailand imposes on the US, could reduce the US trade deficit.
“Simply put, the U.S. has done its homework,” Dr. Supavud said. “Navarro seems to prefer that the US impose more tariffs on Thailand instead of asking Thailand to lower its tariffs. That way, the US can raise more revenue, which it believes could help reduce the budget deficit.”
Dr. Supavud expressed concern about the risks that US trade policy poses to Thailand, especially given that exports to the US account for nearly 20 percent of Thailand’s total exports or about 9 percent of the country’s GDP.
Longstanding Challenges Persist
He added that Thailand’s older problems remain unresolved, in particular, persistently slow economic growth and long-term supply-side issues. Essentially, the issue is how Thailand can expand its production capacity.
One major concern is the aging population. There are currently 12.5 million Thais over the age of 60. Of these, only a third are employed and 45 percent of this group have no savings. The remaining 55 percent have on average less than 100,000 baht ($2,950) in savings. It is predicted that this aging group will grow to more than 18 million in the next 15 years.
Research shows that economic growth typically stems 15–30 percent from labor expansion, 20–35 percent from investment, and 40–60 percent from technological advancement. Therefore, technology will play a critical role in future growth, making it essential for Thailand to invest in human development and innovation, especially given the declining size of the labor force.
Dr. Supavud recommended that Thailand needs to invest in agricultural technology in addition to developing human capital. Currently, agriculture accounts for only 8.6 percent of GDP, but it takes up 30 percent of the country’s labor force, 45 percent of its land and nearly 70 percent of its water resources. The imbalance, he noted, is glaring.
In terms of competitiveness, Thailand ranks fifth in agricultural exports to China and has comparative advantages in food and agricultural goods. He urged Thailand to build on this strength as competition in the industrial sector would be far more difficult. In addition to agriculture, Thailand also has the potential to be a leader in tourism and medical tourism, sectors that should be continuously expanded.
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