Trump’s potential tariffs on China, Mexico, and Canada could escalate trade tensions, impacting US and global economies. Meanwhile, Thailand’s exports are expected to slow amid these uncertainties.
The world saw a brief relief after Trump refrained from universal tariffs but trade conflicts between China and the US could intensify.
China faces increasing trade pressure from the US. On January 20–21, Mr. Trump announced plans to consider additional 10% tariffs on Chinese imports and 25% tariffs on imports from Mexico and Canada, which might take effect on February 1. Moreover, on January 23, the US Congress introduced the Restoring Trade Fairness Act to revoke China’s Permanent Normal Trade Relations (PNTR) status. This would lead to minimum tariffs of 35% for non-strategic goods and 100% for strategic goods imported from China, with phase-in increases over the next five years.
We estimate that the US tariff hikes on China, Mexico, and Canada would reduce Chinese exports and GDP from baseline by 2.38% and 0.08%, respectively. Meanwhile, it might not be worth the cost for the US, as losses on the US’s exports and GDP would be four times more than China’s. Also, the revocation of China’s PNTR status might worsen the “decoupling” or disrupt the global supply chains. Looking forward, China is expected to speed up measures to boost consumption and investment to mitigate impacts of a weakening export trend.
Thai exports projected to slow down from better-than-expected growth in 2024 to 2.7% in 2025, amid challenges from escalating trade tensions.
December exports grew by 8.7%, bringing 2024 growth beyond expectations at 5.4%. However, 2025 export growth is expected to slow to 2.7%. Export value in December grew for the sixth consecutive month at 8.7% YoY to USD 24.8 bn, driven by exports of capital goods and raw materials across nearly all categories. Exports to almost all key export markets also saw an expansion. For 2024, total exports grew 5.4% YoY to a record high of USD 300 bn.
Exports in December continued to grow strongly from November’s +8.2% YoY, partly benefiting from accelerated demand from trading partners to prepare for uncertainties surrounding US President Trump’s trade policy. Looking ahead, Krungsri Research forecasts Thailand’s export growth to decelerate to 2.7% in 2025. This slowdown reflects structural challenges, such as declining competitiveness of Thai industries, risks from intensifying trade tensions, and increased competition from Chinese products expected to flood global markets (if the US imposes higher tariffs on Chinese imports).
However, Thai exports will be supported by the global economic expansion, projected by the IMF at 3.3% in 2025, close to 2024’s 3.2%. Additional growth drivers include the expansion of the digital economy and tourism-related activities, which will boost demand for certain export items such as electronics, food, and agricultural products.
Krungsri Research estimates Thailand may see only slight gains from US imposing 10% import tariffs on China and 25% tariffs on Mexico and Canada. US President Trump recently announced plans to consider raising tariffs on all imported goods from these three countries, which might take effect on February 1.
Under Krungsri Research’s economic assessment using the Global Trade Analysis Project (GTAP) model, based on the scenario of the US imposing a 10% tariff on all imports from China and a 25% tariff on all imports from Mexico and Canada, the result shows that Thailand’s exports and GDP could rise from the baseline by only +1.65% and +0.05%, respectively.
Thailand may benefit from (i) increased exports in some certain products, due to substitution effects and (ii) production relocations to avoid tariff impacts. However, these positive effects are concentrated in a limited range of products. Importantly, negative impacts on Thai exports are more widespread across various industries. Additionally, the uncertainty surrounding President Trump’s international trade policies continues to pose challenges, potentially disrupting the global economy and trade, which remains a significant concern for Thailand’s overall economic outlook.
In a notable shift in international trade dynamics, the world experienced a momentary sense of relief after former President Donald Trump refrained from implementing universal tariffs on imports. This decision was pivotal, as tariffs have the potential to escalate trade tensions and disrupt global markets. The initial pause brought about a temporary stabilization in trade relationships, signaling a hope for constructive dialogue between the United States and its trade partners.
However, the underlying complexities of trade relations, particularly between the U.S. and China, suggest that the respite may be short-lived. Despite the absence of sweeping tariffs, fundamental disagreements over trade practices, intellectual property rights, and economic policies remain unresolved. Both nations continue to vie for dominance in technology and manufacturing, contributing to an environment ripe for renewed conflict.
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