# Thai Economy Faces Strain from U.S. Trade Policies

- Link: https://www.thailand-business-news.com/banking/211634-thai-economy-faces-strain-from-u-s-trade-policies
- Published: 2025-04-23T10:46:14+07:00
- Author: Nguyen Trang

Current US trade policies and global reactions significantly influence the global
economy, financial markets, and international trade. The Thai economy is under pressure
from multiple sources, leading to heightened volatility and uncertainty, which may
adversely affect exports, according to à Bank of Thailand report.

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The United States’ current trade policies, coupled with reactions from major economies,
are poised to significantly influence the global economy, international financial
markets, and world trade. The Thai economy is likely to face pressure from this 
ongoing situation through various channels, although the effects may take time to
manifest.

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In the short term, the Thai economy is experiencing increased volatility in the 
financial markets, alongside a slowdown in production, trade, and investment due
to heightened uncertainty. The impact of tariffs on exports is expected to become
more pronounced in the latter half of the year. The severity of this impact will
depend on the tariffs imposed on Thailand relative to other trading partners, as
well as the retaliatory actions between major economies and the United States. The
effects on the Thai economy will be transmitted through five main channels.

## Increased Volatility in Financial Markets

Asset prices in global and **Thai financial markets have become more volatile**;
however, overall liquidity and market functioning remain normal. The Thai baht has
appreciated slightly against the US dollar since before April 2nd, by 2.71% as of
12:00 PM on April 17th, compared to the Japanese yen and South Korean won, which
have appreciated by 4.75% and 3.11%, respectively.

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The baht strengthened against US dollar in line with the region currencies, following
the rapid depreciation of the US dollar due to concerns over its negative impact
on the United States economy. The stock market has declined in line with the region,
while **Thai government bond yields have increased slightly.**

Although there have been no unusual transactions from institutional investors. Overall,
corporate bond issuance remains normal, but the financial conditions of businesses
affected by tariffs need to be closely monitored. In addition, Thailand’s external
stability remains favorable.

## Investment: Wait and See

The ongoing high level of uncertainty has led to a delay in business and investment
decisions (wait and see), particularly in industries that primarily export to the
United States (electronics, electrical appliances, machinery, and automotive). Some
are awaiting clarity before proceeding with new investments. **In the future, if
Thailand is subjected to higher tariffs compared to other countries, there may be
a relocation of production out of Thailand.**

## Export impact postponed due to the 90-day delay in reciprocal tariffs

The increase in tariffs mainly impacts Thai exports, but uncertainty remains due
to the 90-day postponement of reciprocal tariffs implementation. Consequently, **
the effects are anticipated to be more noticeable in the latter half of the year,
with possible export growth in the second quarter, especially in processed foods.**

Thailand’s export **exposure to the United States accounts for 18% of Thailand’s
total exports and 2.2% of GDP**. The main sectors affected include the electronics,
machinery, automotive, electrical appliances, and processed food industries. Moreover,
Thai exports will experience additional impacts through the global supply chain 
producing for United States demand, including rubber, automotive parts, metal and
steel, and chemical product, accounting for approximately 4.3% of Thailand’s exports.

**Source** : [https://www.bot.or.th/en/news-and-media/news/news-20250417.html](https://www.bot.or.th/en/news-and-media/news/news-20250417.html?rand=113190)