Thai exports face headwinds amid Trump's return to the White House

 

Thai exports are projected to achieve a modest growth of 2-3% in 2025, but analysts warn of challenging headwinds, particularly from the potential impact of "Trump 2.0" policies. 

 

Experts are concerned over possible US tariff hikes and intensifying competition from Chinese products in global markets, though Thailand's recent entry into the BRICS grouping may help mitigate some risks.

 

 

          Export outlook

 

The Commerce Ministry expects Thai exports to achieve $306-309 billion in 2025, building on the 5% expansion achieved in the first 11 months of 2024. 

 

Poonpong Naiyanapakorn, director of the Trade Policy and Strategy Office, however, emphasises that this projection hinges heavily on forthcoming US trade measures following Donald Trump's inauguration on January 20.

 

 

"We need to carefully assess the situation after Trump takes office," notes Poonpong. He identifies four key supporting factors for Thai exports: gradual global economic recovery, sustained demand for agricultural products, growth in electronic components, and potential benefits from manufacturing relocations due to US-China trade tensions.

 

 

 

          The Trump factor and trade risks

International economics expert Assoc Prof Aat Pisanwanich presents a more cautious outlook, projecting growth of 2.2-2.7% for 2025. He warns that Trump's proposed 10-20% global tariff increase could have a big negative impact on Thai exports. 

 

"A 10% tariff on Thai goods could reduce exports to the United States by 5-10%, equivalent to 190 billion baht this year," he explains.

 

Pranee Sutthasri, the senior director of macroeconomics at the Bank of Thailand, outlines three key channels through which Trump’s policies could influence Thailand's economy. 

 

Firstly, there may be heightened competition in global markets with Chinese products, which could reshape market dynamics. 

 

Secondly, there is the possibility of manufacturing operations relocating to Thailand and the wider ASEAN region, potentially boosting local industries. 

 

Lastly, the economic connections with China might impact Thailand's exports and tourism, compounding the effects of these shifts.

 

 

Analysts and experts concur that Thailand's entry into BRICS on January 1, 2025, brings a mix of opportunities and risks. On one hand, this membership could provide access to more affordable oil, gas, and fertilizers, as well as alternative currency trading options. 

 

Conversely, it may also lead to increased US tariffs, as Trump has threatened a 100% duty on BRICS nations that transition away from the US dollar.

 

 

 

          Domestic concerns

Chaichan Charoensuk, chairman of the Thai National Shippers' Council (TNSC), underscores a number of domestic challenges facing the Thai economy. 

 

He points to high production costs that hinder global competitiveness, along with a heavy dependence on large exporters, who account for 70% of the nation’s exports. 

 

Additionally, he notes that small and medium-sized enterprises (SMEs), which make up 99.5% of all businesses in Thailand, struggle with limited market access. Furthermore, these SMEs are increasingly contending with rising competition from Chinese imports.

 

 

          Strategic recommendations

Experts recommend several strategies to sustain export growth in Thailand. First, they emphasise the need to accelerate support for SMEs to help reduce production costs. 

 

Additionally, enhancing product value through innovation and technology is crucial. Developing agricultural cooperatives can also improve market access for these businesses. 

 

They also advise focusing on future food products that align with emerging global demands to ensure competitiveness in the marketplace.

 

 

The Commerce Ministry plans to send a delegation to the United States by February 2025 for trade negotiations, emphasising that Thailand's lower trade surplus with the US (compared to China and Vietnam) should protect it from severe tariff increases.

 

Growth sectors for 2025 include fresh and processed foods, electronics, automotive parts, and EVs, though these industries remain vulnerable to potential US trade policies. The TNSC recommends quarterly monitoring of international trade fluctuations and increased funding for international trade activities to diversify risks.