Reciprocal tariffs imposed by the United States could lead to economic losses of approximately 359 billion baht for Thailand, resulting in a nearly 2% reduction in gross domestic product (GDP), as reported by the University of the Thai Chamber of Commerce (UTCC).
The reciprocal tariffs, set to take effect on April 9, are 37%, as indicated in an executive order issued by President Donald Trump. Initially, a chart displayed a 36% rate for Thailand, but it was later clarified that the figures for several countries were one percentage point lower than the official rates listed in the annex.
Thanavath Phonvichai, president of the UTCC, noted that the upcoming tariff hikes, which are rising to 25% this week, will impact four key product categories: steel, steel products, aluminum, and automobiles and auto parts. The total export value for these categories is projected to reach US$4.73 billion by 2025, but following the tariff increases, this value may drop to $4.08 billion, translating to a loss of $650 million, or about 22 billion baht, according to the university’s analysis.
These tariffs could also lead to a surge of Chinese products entering the Thai market, including machinery, furniture, miscellaneous goods, electrical equipment, electronics, and textiles, as China seeks alternative markets for its exports, he explained.
Mr. Thanavath estimated that in light of the recent earthquake, overall economic losses for Thailand may reach 375 billion baht, resulting in a GDP decline of 2.02%. Consequently, the university has lowered its GDP growth forecast for the year to just 1%.
Dhanakorn Kasetrsuwan, president of the Thai National Shippers’ Council (TNSC), indicated that various industries are likely to feel the repercussions of the increased tariffs. Each sector is currently evaluating the potential damage, with a more comprehensive analysis expected by May. “The TNSC anticipates these changes could impact exports in the latter half of the year and may reconsider its initial export growth target of 1-3% for this year in the second quarter,” Mr. Dhanakorn stated.
To address the challenges posed by these tariff increases, the council has outlined proposals, including accelerating negotiations with the US to promote Thai investment, increasing imports of essential goods from the US to reduce the trade surplus, and utilizing the Asean+ approach to enhance bargaining power.
Thailand should also expedite free trade agreement negotiations with other key trading partners to minimize trade risks and broaden export opportunities, he added. The proposals target improvements in Thailand’s international trade and investment structures, encouraging local investment using Thai raw materials, involving domestic suppliers, promoting environmentally friendly industries, and transferring advanced technology to develop Thai labor skills.
The council also called for tighter inspections on imported goods that may bypass US regulations.
To enhance competitiveness, the TNSC suggested reforms in logistics and trade facilitation to lower costs, including addressing port congestion and improving systems like the National Single Window and Port Community System.
Visit Limlurcha, president of the Thai Future Food Trade Association, mentioned that in the ready-to-eat food sector, the tariff hikes will heavily impact exports of canned tuna and canned vegetables and fruits. However, it is essential to compare Thailand’s reciprocal tariff rates with those of competitors such as Vietnam, the Philippines, China, and Indonesia, all of which maintain a strong presence in the US market.
Despite the challenges, Thailand’s ready-to-eat food exports grew by over 20% in 2024. Without the tariff increases, growth this year could have matched or surpassed that rate, Mr. Visit stated, suggesting a detailed review of the current situation may be necessary.
To navigate the upcoming challenging business environment, Mr. Visit proposed that Thai producers focus on managing production costs, inventory, and planning. For companies with orders placed 6-9 months in advance, it is crucial to confirm with US importers about potential delivery delays. If significant inventories are held by importers, this could lead to further postponements.
He underscored the urgent need for government negotiations with the US to ensure competitive tariff rates and to address concerns regarding rerouted Chinese products entering Thailand to avoid tariffs, highlighting China’s significant investments in Southeast Asian countries. Regarding the US’s push for Thailand to import its pork, Mr. Visit acknowledged Thai consumers’ health concerns regarding the use of growth hormones in US pork but noted that there might be opportunities to import offal as raw material for pet food to enhance protein content.
Suriyon Sriorathaikul, managing director of Beauty Gems, a gems and jewelry producer, emphasized the immediate need for government support for local producers most affected by these changes. Proposed measures could include reducing interest rates to zero or providing relief similar to that offered during the pandemic. Thailand exports gems and jewelry worth approximately 400 billion baht annually, with 10-20% of those exports going to the US.
