BANGKOK — After the upcoming presidential election in the US, whether Donald Trump or Kamala Harris wins, Thailand must prepare for an intensified trade war, according to the Thai finance minister. The exchange rate will be decisive if export structures shift.
Deputy Prime Minister and Finance Minister Pichai Chunhavajira provided insights into the upcoming US presidential election, which will be held on November 5, or November 6 Thailand time. He noted that regardless of whether Trump or Harris wins, problems will arise as both are likely to prioritize their national interests.
In the past, the U.S. has had a “one man show” approach to global leadership, but now, with new global players, the U.S. needs to adjust its governance approach. Regardless of who wins the election, the challenges will remain, even if they will be different.
With the potential escalation of the trade war, Thailand needs to take a holistic approach and make the necessary adjustments. By adjusting effectively, Thailand can benefit; in fact, foreign investment incentives have reached a record high in the last decade. The country needs to focus on two key areas:
Develop and support local content production to encourage Thai entrepreneurs to improve.
Ensure that production remains in Thai hands and that products are not only assembled in Thailand.
As far as the exchange rate is concerned, there are two critical aspects. First, in the event of a devaluation of the baht, Thailand must maintain the stability of the currency and prevent it from depreciating below that of neighboring countries in order to maintain the competitiveness of exports.
The second aspect is that currencies fluctuate depending on the dollar, but unlike in the past, Thailand has sufficient liquidity and reserves to cope with this. The more critical focus should be on export capabilities.
Currently, the baht sometimes appreciates and sometimes depreciates against competitors’ currencies. A long-term view is essential as exchange rates become increasingly important, especially given the changing export dynamics. However, direct intervention is unlikely.
From the Commerce Ministry’s perspective, the director of the Office of Trade Policy and Strategy, Phunphong Nainan, said the outcome of the US election is likely to have a significant impact on Thailand’s economy. Both candidates have different policies on trade, investment and measures that could affect inflation rates.
In the event of a Harris victory, free trade is expected to receive more support. The US could rejoin the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which would be an opportunity for Thailand to consider joining in order to expand trade with member countries.
Technological cooperation with Asian partners could benefit Thailand, especially in technology transfer and investment in Industry 4.0. Harris could take softer tax measures on China than Trump. However, this could still impact supply chains linked to China and push Thailand to diversify risks and seek new trading partners.
If Trump returns to office, tariffs, especially on Chinese imports, could be increased significantly, up to 60 percent or more. This could result in more manufacturing moving from China to Thailand, which would boost demand for Thai products in the US. However, the US could also impose non-tariff trade barriers, meaning that Thailand would have to improve its production standards in order to remain competitive in the US market.
In terms of investment, Harris’ potential victory could increase US investment in Thailand, particularly in the clean technology, renewable energy and innovation sectors. This could open up opportunities for Thai companies to invest in the US, boosting technology transfer and battery production in Thailand.
Harris’ policy could also encourage investment in 5G and AI, opening up opportunities for Thai telecom and software companies in the global supply chain. In addition, smart city initiatives could facilitate knowledge sharing between the two countries, and AgriTech partnerships could capitalize on Thailand’s strengths.
Conversely, Trump’s “America First” approach could lead to a decline in US investment in Thailand if he wins the election, particularly in the manufacturing sector, as tax incentives could lure US companies back to the country. This could have an impact on the Thai electronics and automotive supply industries.
In addition, technology transfer from the US could slow down, which could hinder the development of Industry 4.0 in Thailand. Investment in R&D and innovation by US tech companies could decline, limiting access to advanced technologies such as semiconductors and 5G, which could impact the Thai tech sector.
To prepare for potential policy uncertainties, Thailand should consider several measures. Companies should diversify their export markets beyond the US, encourage innovation and upgrade their products to maintain their competitiveness. Keeping a close eye on US trade and economic policies will allow Thailand to adapt quickly. Investment in clean technology and alternative energy should also be prioritized to address future energy shifts.
At the national level, Thailand should accelerate infrastructure and workforce development to support investment in clean technology and innovation. Promoting domestic R&D can reduce dependence on foreign technology.
Partnerships with other countries in the region will attract investment and build a resilient supply chain. Finally, Thailand should create a flexible, responsive investment policy that is aligned with global trends.
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