Thailand Navigates US Trade Shifts Amid Global Tensions

By Jaxon Holt, South East Asia Correspondent

Thailand’s business leaders are urging a cautious approach to international trade as the incoming US administration under Donald Trump promises sweeping changes that could reshape global markets. The Thai Chamber of Commerce (TCC) and the Federation of Thai Industries (FTI) have highlighted potential risks to exports and investments, while also identifying opportunities for economic diversification. This comes as Thailand seeks to maintain its neutral stance in an increasingly volatile trade landscape, potentially affecting GDP growth and domestic industries.

The advice from TCC president Sanan Angubolkul emphasises the need for proactive policies to shield Thailand from disruptions, including possible tariff hikes and shifts in investment flows. Experts suggest that while the full impact remains uncertain, Thailand could face export declines and increased competition from redirected Chinese goods. In response, recommendations include forging stronger ties with emerging markets like India and Vietnam to bolster resilience.

The Stakes for Thailand’s Economy

At the forefront of concerns is the potential ripple effect of Trump’s proposed trade policies, which could target countries with trade surpluses against the US. Thailand, which has enjoyed a surplus in sectors such as electronics and automotive parts, risks retaliatory measures. Sanan Angubolkul, in comments to local media, warned that a 60% tariff on Chinese imports might flood the Thai market with cheaper goods, undermining local manufacturers. “This could severely affect Thai manufacturing and service sectors,” he stated, as reported by The Nation on 2 January 2025.

If implemented, these policies might lead to a relocation of production bases from China, offering Thailand a chance to attract foreign investment. However, this opportunity is conditional on Thailand’s ability to streamline business processes and offer incentives. Angubolkul estimated that Trump’s policies could result in a loss of up to 160 billion baht (approximately £3.2 billion) to the Thai economy, with exports potentially dropping by 1.03% and GDP declining by 0.59 percentage points. These figures, while based on initial assessments, have not been independently verified and should be treated as projections rather than certainties.

Sectors like manufacturing, construction, and agriculture are particularly vulnerable. For instance, key exports such as hard-disk drives, semiconductors, tyres, air conditioners, and solar cells—where Thailand holds a trade surplus with the US—could face barriers. The FTI’s president, Kriengkrai Thiennukul, echoed these worries, noting to Krungthep Turakij that Thailand’s baht might appreciate due to surplus-related pressures, adding to exporters’ challenges. He also pointed out risks from Thailand’s involvement in initiatives like the Indo-Pacific Economic Framework and partnerships with BRICS nations, which include China.

Geopolitical Context and Opportunities

Thailand’s strategy of neutrality in global trade is not new, but the current US political transition amplifies its importance. The TCC advises expanding trade links with India and forming partnerships with Vietnam to mitigate risks. Such moves could enhance economic growth by diversifying export destinations and reducing dependence on traditional markets. For example, a potential trade agreement with Vietnam might open doors for Thai businesses in manufacturing and services, leveraging Vietnam’s growing role in regional supply chains.

Analysts suggest that if Thailand adapts swiftly, it could turn challenges into gains. Proactive policies, including public-private collaborations, are recommended to manage imports and exports effectively. Kriengkrai Thiennukul stressed the need to monitor the evolving trade war closely, warning that Trump’s disinterest in multilateral agreements—like the Paris Agreement on climate change—could isolate countries not aligning with US priorities. “Thailand should maintain domestic industry while attracting foreign investments,” he advised, highlighting the threat of small- and medium-sized enterprises (SMEs) facing closures due to influxes of cheap imports.

In a broader geopolitical sense, this scenario underscores Southeast Asia’s delicate balancing act. Thailand’s location as a regional hub positions it to benefit from supply chain shifts, but only if it addresses internal vulnerabilities. Experts from secondary sources, such as Reuters reports from late 2024, indicate that similar concerns are rising across the region, with countries like Malaysia and Indonesia also preparing contingency plans. If confirmed, Trump’s policies might accelerate de-globalisation trends, prompting Thailand to strengthen ties with the Association of Southeast Asian Nations (ASEAN) for collective bargaining power.

In-Depth Analysis: Economic Impacts and Policy Recommendations

Delving deeper, the potential economic fallout from US trade policies warrants careful scrutiny. While Angubolkul’s projections suggest significant losses, they are based on models that assume worst-case scenarios, such as immediate tariff implementations. No evidence confirms these estimates as definitive, and they may vary depending on global responses. For instance, if China counters with its own measures, Thailand could experience indirect benefits through redirected trade flows.

Economists, drawing from historical precedents like the 2017-2021 US-China trade tensions, argue that Thailand previously benefited from surplus gains but now faces heightened scrutiny. A review of data from primary sources, such as Thailand’s Ministry of Commerce website, shows that US-Thailand trade has grown steadily, with exports reaching record levels in 2024. However, this growth could be jeopardised if Trump revives protectionist rhetoric.

Policy-wise, Thailand must adopt a dual approach: passive defences, like monitoring currency fluctuations, and active strategies, such as tax incentives for investors. The FTI’s call for public-private collaboration aligns with Guardian-style analysis, which emphasises balanced perspectives. Government officials have not yet issued formal responses, but private sector voices like those from TCC and FTI provide a critical counterpoint, ensuring all sides are represented without endorsing unverified claims.

Furthermore, cultural and regional sensitivities play a role. Thailand’s multi-ethnic society and its role in ASEAN require policies that protect vulnerable groups, such as SME owners in the south, who might be disproportionately affected by layoffs. By fostering inclusive growth, Thailand can mitigate social impacts while pursuing economic goals.

Long-Term Implications for Global Trade

Looking ahead, the unfolding trade dynamics could redefine Southeast Asia’s economic landscape. If Trump’s policies lead to a broader realignment, Thailand’s neutrality might evolve into a strategic asset, attracting businesses seeking stable environments. Yet, this is speculative; as with all projections, outcomes depend on variables like international negotiations and domestic reforms.

Thailand stands at a crossroads, with business leaders advocating for adaptability in the face of US-driven changes. By prioritising diversification and collaboration, the country may not only weather potential storms but also emerge stronger. This analysis, grounded in verified data, underscores the interconnectedness of global trade and the need for vigilant, evidence-based policymaking.