Trump's tariffs and Thailand

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Trump tariffs terrify Thailand

The US president's tariffs on Chinese exports have some leaders concerned Thailand could be the next victim of his mercurial commerce policy, especially as the country has one of the largest trade surpluses with America

February 10, 2025

The US was the largest export market for Thailand last year and any tariffs could affect the local economy.

The stock market fluctuated, gold prices surged, and oil prices fell as global markets reacted to renewed trade tensions between the world's two largest economies, while the Thai bourse felt the ripple effects last week as it plunged.

While the US delayed tariff hikes on Canada and Mexico, President Donald Trump's decision to raise tariffs on China by 10% was met with an immediate retaliation from Beijing, which imposed equal tariffs on products from the US.

Local economists and business operators are bracing for a more critical impact to the Thai economy, which is dependent on the US and China.

MONITORING NEEDED

Rak Vorrakitpokatorn, president of the Export-Import Bank of Thailand, said following the imposition of tariffs on China and indications the EU could be the next target, it is crucial to monitor any anti-dumping and countervailing duty measures on Thai products.

Thailand was hit with these trade penalties for solar panels, as China relocated its production base to Thailand to avoid US tariffs, he said.

"China maintains lower production costs and logistics expenses than many other countries, allowing it to absorb the impact of the additional US tariffs. Therefore, the assumption that Thai products could replace Chinese goods in the US market might be less feasible," said Mr Rak.

"However, if the US increases tariffs again on Chinese imports in the future, Thai exports may have a better opportunity to penetrate the market."

He said Thailand remains a target for tariff hikes as it recorded a trade surplus of US$40.7 billion with the US in 2023.

To navigate risks this year, Mr Rak advised Thai businesses to focus on exploring new markets to act as a buffer against volatility from reliance on the US and China, the two main players in the ongoing trade war.

Alternative markets include India, which maintains a neutral stance with the US and China, and it has strong economic growth prospects. India also has a halal market, which has significant potential given the global Muslim population of around 2 billion, a quarter of the world's population, he said.

Uncertainty regarding global trade stemming from Trump's policies could lead to volatility in financial markets, increasing risks for exporters due to exchange rate fluctuations.

As a result, financial risk management tools such as forward contracts to hedge against currency fluctuations will remain essential for Thai exporters this year, said Mr Rak.

Businesses should also implement scenario planning to assess potential risks, analyse their impacts, and prepare response strategies proactively rather than reacting after issues arise, he said.

The global trade environment is highly uncertain this year, particularly because of Trump's sudden policy shifts, said Mr Rak. While some countries or industries may benefit from this situation, the overall impact is likely to weaken global trade and add uncertainty to both the global and Thai economic outlook, he said.

Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Financial Group, warned Thailand faces higher risk from US trade policies, which could be used as a negotiation tool. This makes Thailand and Southeast Asia potential targets for US trade measures, which could significantly impact the Thai trade sector, he said.

Beyond the potential effects on exports, Thailand may also face pressure to grant greater market access to certain goods, including agricultural products, said Mr Pipat.

On the other hand, Thailand could benefit from multinational companies relocating their production bases. To navigate these challenges and secure the best possible outcomes, the country must be prepared, he said.

"Given Trump's negotiation strategy, the US is expected to begin trade talks with the European region first, followed by China and Asia's major economies," said Mr Pipat. "After that, the US is likely to turn its attention to Southeast Asia, starting with Vietnam and then Thailand, in line with each country's trade surplus with the US."

These negotiations could increase uncertainty and Thailand must monitor the implementation of US tariff policies. If the US negotiates with China, Asean and Thailand may benefit from production base relocations, he said.

UNAVOIDABLE RISK

Paradorn Tiaranapramote, first vice-president of Asia Plus Securities' research division, said Thailand contributes only 2% of the US's imports, less than Mexico (19%), China (17%) and Canada (17%), meaning Thailand is unlikely to be among the first targets of US tariffs.

Trump is negotiating with many countries over import tariffs. Most of these talks are with nations or regions that make up more than 10% of US imports, such as Mexico, China, Canada and the euro zone.

He said the Thai government will negotiate with the US to increase imports of US goods such as ethanol and agricultural goods, while improving its military relationship with the US in order to reduce tariff impacts.

Exports to the US make up 13% of China's total shipments, while the US accounts for 17% of Thailand's exports. If the US and China do not impose harsher tariffs or non-tariff measures and negotiate, the impact of the trade war would ease, said Mr Paradorn.

Kasem Prunratanamala, head of research at CGS International Securities (Thailand), said given Thailand's large trade surplus with the US, there should be concerns about potential tariff hikes on Thai exports.

The US Census Bureau ranks Thailand as having a substantial trade surplus with the US, he said.

Exports of electronics and electrical equipment formed more than half of total Thai exports to the US in 2024, and CGS believes these sectors could be hit by higher tariffs, said Mr Kasem.

The US was the largest export market for Thailand in 2024, with the Thai trade surplus with the US surging from $29 billion in 2023 to $35 billion last year. Thailand's trade surplus with the US increased from 5.5% of Thai GDP in 2023 to 6.6% in 2024.

China, Mexico, Vietnam, Ireland and Germany recorded the five largest trade surpluses with the US during the first 11 months of 2024, according to the US bureau.

The five most popular Thai sectors shipped to the US are: electronics; electrical appliances; rubber products; automobiles, auto parts and accessories; and machinery and parts.

Saharat Chudsuwan, managing director of Tisco Asset Management, said Vietnam has a higher trade surplus with the US than Thailand and is considered a proxy of China by some analysts, meaning it is at higher risk of a Trump import tariff.

However, Vietnam's economic growth is projected to be 6-7%, compared with less than 3% in Thailand, meaning Vietnam has a stronger economic buffer than we do, he said.

"We must not forget that during Trump's first term, a trade war existed, but there were no physical wars. Now there are actual wars going on, so all risks are higher for his second term," said Mr Saharat.

He said while Trump's policies pose high risks and volatility, his goal is to improve the US economy and domestic employment. As a consequence, countries doing business with the US should realise some benefits, said Mr Saharat.

An analysis by the Trade Policy and Strategy Office found 29 Thai product categories at risk of US tariff measures, including computers and components, mobile phones, precious jewellery and components, electrical machinery and agricultural products.

However, the Center for Economic and Business Forecasting at the University of the Thai Chamber of Commerce (UTCC) identified opportunities for Thailand to expand its market share in the US as China faces potential tariff increases, with machinery, electrical appliances, rubber and rubber goods, toys, games, and sports equipment all offering growth potential.

WAR ROOM

Chaichan Charoensuk, chairman of the Thai National Shippers' Council, said the government should urgently set up a Trump 2.0 policy-focused war room and convene a meeting immediately after Commerce Minister Pichai Naripthaphan returns from the US.

He said a unified strategy between the public and private sectors is needed, with clarity on Thailand's position regarding negotiations following the US announcement of measures against Thailand.

Mr Chaichan said the auto parts sector has the potential to increase exports to the US after the announcement of tariffs on Mexico, which were quickly paused for a month. He said negotiations and adjustments to products may be necessary to meet auto parts market demand.

He said certain products require close attention, such as electronic parts, electrical appliances and rubber goods, as importers place orders in advance and they have been ramping up over the last three months, with a noticeable uptick in the volume of electronic parts.

Thanavath Phonvichai, president of the UTCC, said establishing a war room between the government and the private sector is essential because of Trump's background as a businessman, requiring ongoing communication and information exchange.

Mr Thanavath said Trump's actions are unpredictable, such as the recent tariff threats against Colombia, Mexico and Canada that are widely viewed as negotiation tactics. Contrary to Trump's bellicose speeches, a full-scale trade war does not seem imminent, he said.

Regarding the 10% tariff hike on Chinese imports, which is well below the threatened 60% rate, it is unlikely to have a significant effect on China as its products were already affordable, said Mr Thanavath.

While a full-blown trade war seems unlikely in the first half of this year, he said it could emerge later as the US grapples with persistent inflation of 2.9%. This inflation level hampers the Federal Reserve from lowering interest rates, and if prices rise further the Fed might have to raise rates instead, said Mr Thanavath.

Trump's measures appear to be more focused on reinforcing fiscal policies, he said.

Mr Thanavath said the commerce minister's trip to the US for preliminary negotiations could include talks with senior US executives, providing valuable insights into the American perspective on Thailand.

"Thailand is prepared to collaborate with the US to promote a balanced trade relationship. Trump has not mentioned Thailand, so we will have to wait until April to see how things unfold," he said.

FLOOD OF IMPORTS

There are fears Trump's new tariff policy will make it more difficult for the government to control Chinese products flooding the Thai market and affecting local manufacturers, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI).

In addition to a hotter trade war, the tariffs have the FTI concerned over the indirect impact on Thai industries.

Chinese companies may opt to export more products to Southeast Asia, including Thailand, which is struggling to deal with the influx of low-cost Chinese goods, said Mr Kriengkrai. Cheap Chinese imports began to flow into the Thai market starting in 2020, then continued annually, causing a negative impact last year, he said.

Up to 23 industries have been affected by the Chinese product influx, with the FTI predicting the number of industries will rise to 30 this year, including steel, textiles and garments, and consumer products.

"If China faces obstacles to exporting to the US, its goods may flood Thailand and other trading partners, heating up price competition," said Mr Kriengkrai.

He said he wants strong government measures to regulate Chinese imports and promotion of more Thai products in the domestic market.

The Customs Department already imposed a 7% value-added tax on imports valued at less than 1,500 baht to slow their sales, and the Thai Industrial Standards Institute is conducting more frequent inspections of products listed on online platforms.

The Joint Standing Committee on Commerce, Industry and Banking asked the government to strengthen measures, using the 1999 Anti-Dumping Act and the 2007 Safeguard Measures on Increased Imports Act to better deal with the problem.

In terms of using more locally made products in state projects, Mr Kriengkrai said the "Houses for Thais" scheme should have at least 90% of the project's value comprised of Thai products.

https://www.bangkokpost.com/business/ge ... y-thailand

[Jun]

Thailand has a long list of tariffs on imports. So it seems only reasonable to apply reciprocal tariffs.

As for Chinese imports, well Thailand signed a free trade agreement with them. Probably an unwise decision.

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Probably an unwise decision.

Especially since Thailand has agreements with China, not to mention Thailand joining BRICS. China is a prime target for Trump and any country that stands with China is also likely, one way or another, to feel Trump's wrath. Unfortunately Thailand has good reason to be worried.

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Thailand to Discuss More US Imports as Tariff Concerns Linger

Thailand will consider importing more US goods and discuss tariff risks with businesses, according to Finance Minister Pichai Chunhavajira, as the Southeast Asian nation seeks to ease Washington’s concerns over its large trade surplus.

by Patpicha Tanakasempipat, Bloomberg News

February 10, 2025

Thailand will consider importing more US goods and discuss tariff risks with businesses, according to Finance Minister Pichai Chunhavajira, as the Southeast Asian nation seeks to ease Washington’s concerns over its large trade surplus.

The minister is due to meet with the American Chamber of Commerce in Thailand soon to discuss trade concerns, saying tariff risks and US energy imports are likely on the agenda.

Thailand is a net energy importer and has enough domestic demand to import more US energy products, Pichai said. Bloomberg reported last week that Thailand will increase imports of US ethane by at least 1 million tons this year, as well as agricultural products.

Thailand lists the US as its second-largest trading partner and it had a surplus of around $35.4 billion with the North American country in 2024, according to data from the Thai Commerce Ministry. President Donald Trump has railed against several economies that run a surplus with the US, slapping tariffs on rivals and allies alike.

“It’s clear they can increase and decrease tariffs to get what they want, so we will look at the state of our trade with the US,” Pichai said. “If we have demands for something, and we can import more of it, then we may do it.”

Thailand will only look to import from the US what it already has demands for, providing that the quality and prices of the goods are within acceptable ranges, Pichai said. Asked about importing US ethane, Pichai said, “I understand they will need to talk about it and compare prices, because many companies have demand for ethane.”

Last week, Commerce Minister Pichai Naripthaphan met with the US Chamber of Commerce and the US-Asean Business Council in Washington DC to entice foreign investments.

Thailand risks an influx of cheap Chinese goods following the Trump administration’s move to slap tariffs on Chinese imports, an industry group said last week. If Prime Minister Paetongtarn Shinawatra’s government fails to act, the number of industries hit hard by cheap imports may swell to 30 from 23 last year, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries.

https://financialpost.com/pmn/business- ... rns-linger

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The baht has weakened slightly against the US dollar and is expected to continue weakening, but Trump's AID freeze is resulting in serious problems for Thailand, especially refugees from violence in Myanmar and Thailand's poor.
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No doctors for sick children. This is the reality of Trump’s aid freeze in remote northern Thailand

by Helen Regan, Ivan Watson, Kocha Olarn, Eugene Sein and Mark Phillips, CNN

Mae Sot, Thailand CNN — Plastic tubes meander from Rosella’s nose to a nearby oxygen tank that’s bigger than she is, as she flicks through a book of her drawings: a flower, a house, a chicken.

The 9-year-old needs non-stop medical attention for the bone condition she was born with that has left her ribs pushing dangerously on her lungs, one of which is not working as it should.

“She cannot breathe properly,” her mother, Rebecca, 27, tells CNN via video call. “She needs a constant supply of oxygen.” But she doesn’t know how long it will last.

Rosella and her mother are refugees living in one of nine remote camps dotted along Thailand’s mountainous border with Myanmar.

About 100,000 people live in the camps, having fled decades of fighting between the Myanmar military and ethnic minority rebel groups. The situation at the border has worsened in recent years by the junta’s coup and ensuing civil war.

Mae La is the biggest camp and its US-funded hospital is the only source of health care for more than 37,000 people living there – mostly from the ethnic Karen minority.

When the Trump administration ordered a 90-day freeze on almost all international aid, halting the US’ entire global development network overnight, the camp hospital was forced to shut its doors, sending shock waves through the refugee community.

Video posted by refugees on social media showed patients at the center being lifted from their hospital beds and carried out in hammocks covered in blankets.

Rosella was moved to a nearby improvised health center, along with other patients with chronic conditions. But there are no longer any doctors to treat her.

Numerous aid workers in northern Thailand described widespread panic and confusion following the sudden suspension of aid, especially among those whose work provides life-saving services to some of the world’s most vulnerable and impoverished people on both sides of the border.

Some told CNN they only had a month and a half of funding left to feed tens of thousands of people.

“We have never faced a problem like this before,” said Saw Bweh Say, secretary of the Karen Refugee Committee, which represents refugees in the Thai camps.

Anxiety over medicine and food

Refugees in the Thai border camps live a fragile and isolated existence.

They cannot legally work and need a permit to even leave the camp. The Thai government considers the camps temporary settlements, but some communities have been there for generations.

Basic services such as health care, education, sanitation, water and food are provided by international aid donors. In Mae La, and six other camps, those funds come almost entirely from the US – the world’s largest aid donor – through the International Rescue Committee.

Though the camp hospitals are more akin to field clinics, with tin roofs and intermittent power, they are the only source of health care for tens of thousands of people.

“If it’s an emergency, how can we face the situation? That burdens a lot of people here,” said Ni Ni, 62, who has heart failure and kidney disease.

Without medical oxygen, “I will die,” she told CNN via video call from Mae La.

For some, it’s already too late. In nearby Umpiem camp, an elderly lady with breathing problems died after she could not access supplemental oxygen due to the hospital closure, an IRC spokesperson said.

Other refugees told CNN they now face the cost for treatments such as dialysis – a huge expense when most struggle to feed their families.

An IRC spokesperson said they had to start shutting outpatient departments and other facilities in the camps following the stop-work order. Management of the medical facilities, equipment and water system has been transferred to Thai authorities and camp commanders, though the IRC continues to source medicine and fuel using non-US funds.

Teams of refugee medics, midwives and nurses are working round-the-clock helping to plug the gaps, while families scramble for alternative treatment for their loved ones.

“Karen families donated medicine and oxygen tanks, but that’s not enough,” said Pim Kerdsawang, an independent NGO worker in the border city of Mae Sot.

Compounding their concerns is the cost of food. Feeding more than 100,000 refugees across all nine camps for one month costs $1.3 million dollars, and the organization that provides the food and cooking fuel says it has only enough money to last for a month and a half.

Refugees use a food card system to buy items in the camp shops, which is paid for by The Border Consortium. The food and cooking fuel are funded by State Department’s Bureau of Population, Refugees, and Migration (PRM), the group said.

“The main concern is not having the means to provide the refugees with food and cooking fuel. So far, there is no alternative to the US grant,” said Leon de Riedmatten, executive director of The Border Consortium.

The organization has started prioritizing the most vulnerable refugees who have no income of their own, Riedmatten said, as the aid freeze and continuous arrival of new refugees fleeing violence in Myanmar drains the funds.

Thai hospitals bear the brunt

When Tawatchai Yingtaweesak heard the camp hospitals had shut, his team raced to see how they could help.

Tawatchai is director of the Tha Song Yang hospital, about a 30-minute drive from sprawling Mae La.

With no doctors on duty in the camps, his hospital and several others have stepped in to treat refugees with serious and emergency conditions.

Tawatchai said suddenly closing the US-funded hospital was “dangerous” and, since the aid freeze, his facility has taken in between 20 and 30 refugee patients.

He is working with camp medics and helping to deliver oxygen, among other supplies, but says this can only be a temporary fix. His hospital serves about 100,000 people and while they can cope, he worries that this year’s rainy season will overwhelm them.

Typically starting around June, the monsoon is “high season for disease,” Tawatchai said, with a surge in mosquito-borne diseases and children with pneumonia.

Naw Mary, 32, was rushed to the maternity ward at Tha Song Yang on Sunday, suffering from high blood pressure. Far from her family and home at the camp, she was about to give birth to her first child.

“They said it was risky to deliver a child in the camp without a doctor and facilities so they referred me to this hospital,” Naw Mary said.

Nervous and excited to bring her baby into the world, Naw Mary also said she’s concerned about follow-up care for her newborn and herself.

“Why did they have to stop helping the refugees?” she asked.

‘Those who are really in need’

The pain created by the US aid freeze goes beyond the refugee camps.

CNN spoke to about a dozen NGO and aid workers in the impoverished border region, some of whom requested anonymity as they feared reprisals from the US government, who said basic services were disrupted and staff laid off due to the Trump administration’s policy.

They include cuts to vaccine, education and resettlement programs, domestic violence shelters, anti-human-trafficking initiatives, safe houses for dissidents, and help for displaced people.

For more than 30 years, the Mae Tao clinic near Mae Sot has been a lifeline for vulnerable and impoverished migrants from Myanmar. The clinic handles almost 500 patients a day, and 20% of its funding comes from the US.

Now that funding has been put on hold, the clinic has to reallocate part of its budget so their health care services are not impacted.

“This fund we only use for vulnerable people and those who are really in need,” said Saw Than Lwin, deputy director of organization and development at Mae Tao.

Nearby the clinic, aid workers with the Burma Children Medical Fund load boxes of supplies containing food, infant formula baby milk powder, medicine, and eye screening kits, into a van.

It’s headed across the Moei River, a border between Thailand and Myanmar, to help thousands of people just kilometers away displaced by Myanmar military airstrikes and ground attacks.

The needs in Myanmar are huge, aid workers say, where millions of people struggle with hunger, trauma and the constant threat of attacks.

“The places that we’re working in are the remotest areas in all of Burma, very hard to reach communities without other alternatives to medical assistance,” said Salai Za Uk Ling, founder of the Chin Human Rights Organization.

About 30% of CHRO’s funding comes from the USAID and the group, which provides medical and mental health care to tens of thousands of people in Myanmar’s northwest, has had to cut vital services and lay off staff in the past three weeks.

“Rural communities, people who are living in displaced situation, don’t know a whole lot about international politics, all they care about is their daily survival,” Za Uk said.

“How do we even begin to explain to them why this is happening?”

In Myanmar’s Kayah state, also known as Karenni, the aid suspension has meant teachers’ salaries cannot be paid, leaving kids without education, said Banya Khung Aung, founder and director of the Karenni Human Rights Group.

If they had more notice, groups like his could have sourced alternative funding, he said.

Waivers not being processed

US Secretary of State Marco Rubio has claimed the US is continuing to provide lifesaving humanitarian aid. Rubio, now the acting administrator of USAID, reiterated last week that he had issued a blanket waiver for lifesaving programs.

“If it’s providing food or medicine or anything that is saving lives and is immediate and urgent, you’re not included in the freeze. I don’t know how much more clear we can be than that,” Rubio said, questioning the competency of organizations that haven’t applied for a waiver.

At least six organizations that CNN spoke to in northern Thailand said they had not received waivers, or even been reviewed. And USAID employees told CNN almost all humanitarian assistance programs remain stopped.

“A week or two ago people thought the waiver process would be legitimate, and programs would be reviewed,” one USAID employee based in Washington, DC, told CNN. “When it became clear that was not happening, there was a complete sense of shock.”

Another USAID employee told CNN “work is grounded to a halt because there’s no staff to manage it, and there’s no staff in DC to answer questions from partners.”

Even if funds are made available after the 90-day freeze, “who would then communicate to us or be knowledgeable enough to process what is left of the system?” asked Za Uk from CHRO.

“By time that any funding reaches us, unfortunately for those suffering from serious medical condition might be lost.”

In his January 20 executive order, President Donald Trump said the “US foreign aid industry” serves to “destabilize world peace” and is “in many cases antithetical to American values.”

But those affected in northern Thailand are some of the world’s most vulnerable people who rely on US aid to survive.

In Mae La camp, Rosella can’t stray far from her oxygen tank. She needs one tank every two days, her mother said.

Complicating their family’s situation is that Rebecca is five months pregnant. She used to get her ultrasounds and prenatal care at the hospital, but that has all stopped as well.

“I don’t know what to do. There are no doctors to go and see right now for this pregnancy,” she said.

“I’m worried for my daughter and this pregnancy, worried for everyone.”

Story, photos, and video: https://edition.cnn.com/2025/02/11/asia ... index.html

[Dodger]

I wonder if neighboring Thailand and some of the other SE Asian countries will step forward and provide the needed aid?

[Gaybutton]

I wonder if neighboring Thailand and some of the other SE Asian countries will step forward and provide the needed aid?

Three guesses . . .

So far nothing in the media about Thailand or any other country even considering it, much less providing any temporary emergency funding. I don't like to think it, but I have a feeling a lot of unfortunate people are going to die before anything substantial is done, if anything actually will ever be done at all.

[Jun]

On a per capita basis, the US is behind many European countries with development aid. Although, they're well ahead with contributions to other good causes, such as military aid to a well deserving eastern European country.

Japan is the only significant Asian aid contributor on a per capita basis. Not even Singapore steps up to the plate.
I suspect the Thai establishment will continue to look after itself.

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Thai establishment will continue to look after itself.

Anyone remember JFK's Peace Corps? Can you even begin to imagine Trump coming up with such a program?

Trump is much more likely to follow this line of thinking:

"If they would rather die they had better do it, and decrease the surplus population."
- Scrooge

The trouble is with Scrooge it was fictional. With Trump it's reality.

[Jun]

To be fair, with the exception of Japan, there's very little evidence of any Asian country contributing significant aid to their neighbours.
Including the ones who have got rich on industry, finance or oil.

I'm not sure the US should be first in line for criticism on this topic.