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Mixed Impact of Trump Administration on Thailand

Mixed Impact of Trump Administration on Thailand

The “Trump 2.0” policies, which refer to strategies employed by the US president during his second term, are projected to affect various products, including computers, equipment and components, electronic devices, rubber products, and agricultural goods. However, sectors likely to benefit from these policies include semiconductors, steel, and aluminum, according to a study by the Fiscal Policy Office (FPO).

Pornchai Thiraveja, director-general of the FPO, highlighted that Trump’s inauguration speech heralded a “Golden Age of America,” emphasizing an “America First” approach that prioritizes protecting US trade interests, increasing national revenue through tariffs on imports from countries like China, and supporting domestic manufacturing and agriculture.

The goal of these trade policies is to address trade imbalances, renegotiate trade agreements for the benefit of domestic labor and industries, encourage businesses to relocate production back to the US, stimulate the economy, create jobs, and reduce reliance on foreign imports.

Additionally, Trump has pledged to repeal environmental regulations aimed at combating climate change, eliminate rules for electric vehicles to promote energy independence, and boost domestic production, particularly in the oil sector.

In terms of trade, Mr. Pornchai stated that the FPO anticipates the Trump 2.0 policies could lead to shifts in global supply chains and trade dynamics that will affect economies, including Thailand. Protectionist trade policies and increased US tariffs may impact Thailand’s exports of computers, components, electronic devices, rubber products, and agricultural goods.

Higher tariffs on Chinese imports could slow China’s economy, potentially decreasing demand for Thai goods. This may lead to an influx of Chinese products into Asian markets, increasing competition for Thai exports, especially in automotive, chemicals, construction materials, and textiles.

To navigate the changing trade landscape, Mr. Pornchai recommends diversifying export markets and import sources, as well as pursuing free trade agreements with the European Union and the European Free Trade Association. He urges the manufacturing sector to focus on high-value and complex products like electronic components, smartphone parts, industrial agricultural goods, and clean energy solutions, along with an emphasis on workforce development and R&D to match global market demands.

He also noted that Thailand has the potential to increase exports to the US of substitute goods for Chinese producers, including semiconductors, steel, aluminum, rubber products, and agricultural goods, thereby capturing a larger market share in the evolving global supply chain.

On the investment front, Mr. Pornchai emphasized the need for Thailand to accelerate investments, as US policies are expected to have a limited effect on US investment in Thailand, which constitutes 18.3% of total foreign investments. Increased import tariffs could prompt companies to relocate production bases to Thailand, especially in electronics and automotive sectors.

There is an opportunity to promote investment in high-tech industries, including semiconductors, electric vehicles, and data centers. Enhancing infrastructure and developing special economic zones, high-speed railways, and ports, along with regulatory improvements and tax incentives for clean energy industries, can further boost Thailand’s attractiveness for investment.

Regarding tourism, Mr. Pornchai mentioned that the impact of US policies on Thailand’s tourism sector should be minimal, as American tourists accounted for just 2.9% of foreign arrivals in 2024. The primary sources of visitors come from China, Japan, and Europe; however, a recovering US economy could lead to an increase in American tourists to Thailand.

To attract tourists from key markets, Thailand should enhance digital payment systems, upgrade infrastructure, and integrate investment promotion into tourism and digital infrastructure initiatives, including high-speed internet and cybersecurity systems. These efforts can increase confidence among both investors and tourists, thereby supporting Thailand’s long-term economic growth.

Mr. Pornchai concluded by stating that effective implementation of fiscal policies can drive economic expansion and stability. The government is also planning to position Thailand as a regional and global financial hub to encourage foreign investment.

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