Analysis cites potential impact of Trump presidency on Thai economy

 

The Economic and Business Forecasting Centre at the University of the Thai Chamber of Commerce has conducted an analysis of the potential impact of a second Trump presidency on the Thai economy. 

 

The centre projects that should Donald Trump implement his proposed policies, including a 60% tariff on imports from China and 10-15% tariffs on imports from other countries, including Thailand, it could lead to damages of around 160,472 million baht. 

 

This would result in a 1.52% decline in Thai exports and a 0.87% drop in gross domestic product (GDP). Thanawat Polvichai, chairman of the centre, said: "Trump's tariff-hike policy will have a direct and indirect impact on Thailand's exports combined, which may cause Thailand to lose 160,472 million baht in export value."

 

The anticipated policies raise concerns internationally, as Trump's first presidency saw significant turbulence in trade relations, particularly between the US and China, both of which are major global economic players. 

 

The prospect of renewed trade restrictions has led to fears of a second trade war, especially with proposed total import taxes of 10-20% on goods, escalating tariffs on Chinese products to an unprecedented 60%.

 

 

The analysis outlines both direct and indirect repercussions for Thailand. 

 

Direct impacts may include a potential decrease in exports to the US by about $3.1 billion (around 108,714 million baht), affecting sectors such as electronics, machinery, processed foods, vehicles, and rubber products, as import tariffs increase. Additionally, US direct investment in Thailand is likely to decline, influenced by Trump's "America First" policy.

 

 

Indirectly, Thailand could see a significant reduction in raw-material exports related to the China-US supply chain, estimated at 49,105 million baht, due to rising tariffs on Chinese goods. Furthermore, should China retaliate with tariffs on US imports, Thai exports linked to US goods could decrease by $75.8 million, representing 0.03% of total exports.

 

Despite these challenges, there remains an opportunity for Thailand to export products in place of those from China, particularly machinery and electrical appliances, provided that Thailand can adapt its production capabilities to meet demand. 

 

Looking ahead, the centre forecasts that Thai exports may experience modest expansion of 1.2% in the fourth quarter of 2024, potentially driven by easing inflation and interest rate cuts in various countries. For the whole of 2024, exports are projected to grow by 3.21%, reaching an estimated value of $294.2 billion. 

 

Meanwhile, exports in 2025 are expected to increase by 2.8%, continuing to focus on electronics, rubber products, and machinery as key drivers in the US, ASEAN, and European markets. However, a rise in US import tariffs could substantially restrain these growth forecasts, potentially reducing export expansion to as low as 1.24% next year.