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Economic analysts warn that a reciprocal imposition of tariff barriers by the United States and the European Union could severely disrupt global trade, given their roles as key links in global supply chains and as major consumer markets.
Tensions have intensified after US President Donald Trump threatened to levy tariffs of up to 25% on eight European allies that oppose his demand for US control of Greenland. Under the proposal, a 10% tariff would be imposed on imports from the UK, Denmark, Norway, Sweden, France, Germany, the Netherlands and Finland, with the rate rising to 25% in June if Denmark does not agree to sell Greenland by June 1.
In response, the EU is considering retaliatory tariffs on US goods valued at US$93 billion should the measures be implemented. The bloc is also weighing the use of its anti-coercion instrument—often dubbed the “trade bazooka”—which would allow it to restrict US access to certain economic benefits.
Aat Pisanwanich, an economic analyst at Intelligence Research Consultant Co Ltd, said trade barriers between two of the world’s largest markets would have far-reaching consequences.
“When EU exports to the US face obstacles, Thai exports to the EU would also be affected, as European producers are likely to redirect goods to other global markets,” he said.
He noted similarities to the aftermath of the US–China trade war, which resulted in a surge of Chinese goods flooding global markets. A similar pattern could emerge if US–EU tensions escalate, with increased competition from Chinese, American and European products worldwide.
Thai industries integrated into EU supply chains—such as auto parts, electrical appliances and rubber—would be particularly vulnerable. In addition, exports of agricultural products including fruit, rice and seafood could decline as EU purchasing power weakens.
Mr Aat urged Thailand to speed up negotiations to conclude a free trade agreement with the EU, while also exploring trade frameworks through regional blocs such as Asean and Asean+3, which includes China, Japan and South Korea.
Potential Upside for Thailand
Asia Plus Securities (ASPS) noted that Thailand could potentially benefit if the dispute escalates into a full-blown trade war, especially if the US and EU significantly reduce trade with each other.
The brokerage pointed out that EU trade accounts for 18% of total US trade, while the US represents 7% of the EU’s total trade. EU goods make up 20.2% of US imports. The proposed tariffs could sharply raise prices of products such as electronic components, automobiles, pharmaceuticals and oil, complicating efforts to curb US inflation, currently at 2.7%, while also weighing on global economic growth.
Despite these risks, ASPS believes Thailand could emerge as a beneficiary. The US accounts for US$83 billion, or 12.9%, of Thailand’s total trade, while the EU contributes US$49 billion, or 7.63%. Combined, the two markets represent around 20.5% of Thailand’s overseas trade—more than China alone.
If US–EU trade slows, both sides may turn to Thailand as an alternative supplier, while companies from the US and Europe could increase investment in Thailand as a neutral production base, ASPS said.
Thailand could also attract greater foreign direct investment due to its strong trade ties with both regions, competitive costs and growth potential. As a key manufacturing hub for electronic components, vehicles and processed food, Thailand is well positioned to expand exports to both the US and Europe.
ASPS added that while geopolitical tensions typically weigh on global risk assets, capital flows may shift towards markets perceived as more stable, including Asian equities such as the Stock Exchange of Thailand.
The brokerage said such a shift could boost sentiment for industrial estate developers WHA Corporation and Amata Corporation; electronics and auto parts manufacturers such as Delta Electronics Thailand, Somboon Advance Technology and AAPICO; and food producers including Charoen Pokphand Foods, Thai Union Group and Thaifoods Group.