Thailand’s substantial export surplus with the US is under threat from potential tariff hikes prompted by the trade policies of the Trump administration.
Thailand’s $35 billion export surplus with the United States faces significant pressure from Trump’s trade policies. Key Thai exports such as computers, cell phones, solar panels, air conditioners, and jewelry are under scrutiny, as US trade representatives examine Thailand’s growing trade surplus, which placed the country 12th among nations with trade surpluses with the US in 2024.
Experts warn that Trump’s policies could lead to increased tariffs and trade barriers, potentially harming Thailand’s economy. For instance, FTI president Kriengkrai Thiennukul has warned that Thailand could face a THB160-billion loss due to Trump’s policies, including the potential for appreciation of the baht and volatility in investments.
Key actions taken by the Thai government include:
- Intensive monitoring of US trade policy changes.
- Assessment of the impact on specific product categories.
- Planning a delegation to Washington in February to negotiate tariff exemptions.
The Thai Chamber of Commerce warned that Trump’s trade policies could trigger a 160-billion-baht loss for the Thai economy, especially affecting products in which Thailand has a trade surplus with the US, such as hard-disk drives, semiconductors, tyres, air conditioners, and solar cells
The US is Thailand’s largest export market, accounting for 18% of its total exports, making this a critical concern. The Thai Ministry of Commerce is closely monitoring the situation and has initiated an assessment of the impact on 29 key export categories, including computers, cell phones, solar panels, air conditioners, and jewelry.
The Thai Chamber of Commerce suggests increasing imports of certain US products to help balance the trade, but the overall impact remains uncertain pending the appointment of the new US Trade Representative and the specifics of any new tariffs.
The broader implications for regional trade are also significant, given the US’s focus on countries where Chinese companies have relocated manufacturing. Global trade growth forecasts have been revised downwards, potentially negatively impacting both Thai and ASEAN economies.
How might the relocation of Chinese manufacturing to Thailand exacerbate the existing trade tensions between Thailand and the US?
the relocation of Chinese manufacturing to Thailand could exacerbate existing trade tensions between Thailand and the US in several ways:
Increased Competition and Trade Disputes: The shift of manufacturing from China to Thailand could lead to increased competition for the US market. If Thailand becomes a major exporter of goods previously manufactured in China, this could trigger protectionist measures from the US, such as tariffs or trade restrictions, leading to retaliatory actions from Thailand. This is particularly relevant given the existing trade tensions between the US and China and the US’s history of using tariffs as a trade tool. The US might view Thailand’s increased exports as an attempt to circumvent US tariffs on Chinese goods.
US Concerns about Supply Chain Security: The US may harbor concerns about relying on a single Southeast Asian nation (Thailand) for crucial goods, especially if those goods were previously sourced from China. This concentration of production could create new vulnerabilities in the US supply chain, potentially leading to demands for greater transparency and control, placing further pressure on Thailand.
Geopolitical Leverage: The US might use its economic leverage to pressure Thailand to align more closely with its interests on various geopolitical issues. The US could condition trade concessions or investment on Thailand’s stance on matters unrelated to trade, escalating tensions.
To navigate these challenges, Thailand is advised to maintain a neutral stance in global trade, diversify its export markets, and explore new markets such as India to act as a buffer against volatility from reliance on the US and China.37
Thailand’s recent entry into the BRICS grouping on January 1, 2025, may help mitigate some risks, providing access to more affordable oil, gas, and fertilizers, as well as alternative currency trading options
