Thai exports to the United States are projected to be among the most severely impacted in Southeast Asia by potential U.S. tariff increases, given Thailand’s substantial trade ties with the U.S., according to ttb analytics.
The research division of TMBThanachart Bank (ttb) indicated that with Donald Trump returning to the presidency, the U.S. is likely to implement a series of aggressive policies, including significant hikes in import tariffs. It is anticipated that at least 25% of Thailand’s total exports to the U.S. could be affected.
Under a Trump administration, global import tariffs may rise to approximately 20%, compared to an average of 3% during the pre-pandemic period. Tariffs on Chinese goods could see an even greater increase, possibly reaching 60%, compared to an average of 21% previously, according to ttb analytics.
As Thailand’s primary trading partner, the U.S. accounted for $47.9 billion in Thai exports in 2023, or 17.1% of the country’s total exports. However, Vietnam remains the leading regional exporter to the U.S. with a share of 29.5%.
“Electronics and communication equipment, which are heavily linked to Chinese supply chains, are expected to be significantly impacted, representing approximately 25% of Thai exports to the U.S. or 4.3% of Thailand’s total exports,” reported ttb analytics.
Key products, such as solar panels, where Thailand ranks as the second-largest supplier to the U.S., are particularly at risk. Conversely, hard disk drives are likely to experience minimal impact, as Thailand remains the world’s top manufacturer of this product, according to the research firm.
Additionally, Thailand’s ongoing structural economic issues and trade policies may hinder its export performance amid increasing geopolitical risks and ongoing U.S.-China trade tensions.
A surplus of Chinese goods, resulting from U.S. tariffs, is expected to inundate the Thai market and disrupt local production and exports, as noted by ttb analytics.
Thailand lags behind regional competitors like Vietnam and Malaysia in attracting foreign direct investment (FDI), particularly in key growth sectors such as semiconductors. Since 2018, Thailand has attracted only $55 billion in net FDI inflows, the lowest in the region.
In contrast, Vietnam benefits from multiple bilateral and multilateral free trade agreements (FTAs), including those with the EU and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, allowing greater access to alternative markets.
To tackle these escalating challenges in the export sector, ttb analytics recommended that the Thai government urgently engage with the incoming U.S. administration to mitigate negative impacts and fast-track FTA discussions. Policies that support the private sector are crucial for enhancing competitiveness and attracting FDI.
Local businesses should adapt their strategies, enhance competitiveness, and seek out new markets to minimize long-term risks associated with a potential trade war, the researchers advised.
