# Navigating Trade War 2.0: Challenges and Opportunities for Thailand - Link: https://www.thailand-business-news.com/china/233147-navigating-trade-war-2-0-challenges-and-opportunities-for-thailand - Published: 2025-08-17T07:07:21+07:00 - Author: Thailand Development Research Institute As the trade war is now being waged globally, Thailand needs to cope with the emerging impacts while trying to minimize the risks and grasp arising opportunities. It is therefore important to understand both the upcoming headwinds and tailwinds for the Thai economy and businesses in Thailand. ADVERTISEMENT The major headwinds include the impacts on trade, both exports and imports. **Thai exports of goods, which accounts for almost 60% of Thailand’s gross domestic product( GDP), will be negatively affected **in the current trade war as tariffs are hiked by the Trump administration with retaliation from China. This will result in lower global trade growth affecting Thai exports not only to the US but also to other major export markets – China, EU, Japan, and ASEAN. Thai export value in US dollar may grow by only 2-3% this year or half of last year’s.  ### Top Thai exports to the US will be negatively affected by the Trump’s tariffs They include electronics, electrical appliances, machinery, automobile & parts, and agriculture and processed agriculture, and jewelry and parts. Even though the 90 day pause (from April 9th, 2025) on the US reciprocal tariffs was announced for most countries except for China (now additional 145% tariff rate), Canada (24%) and Mexico (25%), there is still a 10% tariff hike on all countries starting on April 5th, 2025. After the 90-day pause, tariff rates will most likely remain higher than those before the additional tariff hikes were imposed. This would raise the prices of imports in the US and could reduce the demand for them. Thus, Thai exports to the US will slow down in the second half of this year. The extent of the slowdown of Thai exports to the US, however, will depend on the tariff rate levied on Thailand relative to its competitors. Should the tariffs levied on competitors’ certain products be much higher than those of the same products from Thailand, Thai products may have a chance of expanding its export share in the US market. For example, US imports of syringes and needles from China today face a total tariff of 245%, while those from Thailand face an average tariff of 15%.  It remains to be seen after the 90-day pause as to how much additional tariff Thai key exports to the US will face compared to its competitors like Vietnam, Indonesia, or Mexico. ### Amid the intensifying trade war, imports into Thailand will also rise As countries face higher tariff barriers, especially from the US, they will try to find new markets including Thailand. This includes Chinese products, especially raw material, intermediate goods, and capital goods, which have been top imports to Thailand over the past 4 years will continue to rise. This is supported by the demand for them by both Thai and Chinese companies in Thailand. This trend will increase over the next few years as more Chinese direct investments pour into Thailand. Specific products such as steel and aluminum products that now face additional US tariffs of 25% may also find their way to Thailand from S. Korea, Japan, and China. Moreover, **the US, in its attempt to reduce its trade deficits, will also want Thailand to import more from the US. **This could be done by requesting Thailand to reduce tariffs on US products (e.g. soybeans and automobiles and parts), raise import quotas for US products (e.g. corn and coffee) and reduce health standards that are now prohibiting the imports of US products (e.g. beef and pork). In addition to goods, the US may request Thailand to reduce its restrictions on investment in services for US companies. On the other hand, Thailand plans to offer to import more liquefied natural gas (LNG) or other agriculture produce from the US.  US products to which Thailand will open its market will depend on the negotiations that will take place over the 90-day period.  Despite the above headwinds,** relocations of businesses to Thailand will continue** as multinational companies (MNCs) seek diversification amid the trade war.  Thailand, being a country that is neutral to all sides in the geopolitical tension, is an attractive destination as it is relatively easy to import and export from Thailand.** This is particularly true compared to China and for exporting to non-US markets, which accounts for over 80% of world trade. **This global-scale relocation happens only once on a few decades.  It is therefore a rare opportunity for Thailand to continue attracting foreign direct investments, for which the Board of Investment registered a record high approval value of applications last year.  Other tailwinds include falling global inflation and interest rate.  As global demand softens, commodity prices, including those of oil, are also declining.  Brent crude oil price this year is forecasted to around US$6 per barrel lower than that of last year. Overall shipping costs will also be lower than those of last year as global trade slows down.  As inflation falls, central banks in most countries will also reduce their policy rates with commercial banks following the trend.  For Thailand, inflation this year is estimated at no more than 1%.  Policy rate could be reduced two more times this year at 0.25% each time, while commercial banks reduce their minimum loan rate (MLR) by around half of that. The baht may weaken against the US dollar in the second half of the year.  Thailand’s export growth is expected to fall in second half of the year, while imports rise should US tariffs be hiked globally.  This would lead to less capital inflows into the country, leading to a weaker baht against the US dollar.  ### Related**Posts** ### 󠀁[Time to Rewrite Energy Rules: Unavoidable Transition for Thailand](https://www.thailand-business-news.com/environment/329524-time-to-rewrite-energy-rules-unavoidable-transition-for-thailand)󠁿 ### 󠀁[What Would an ASEAN-Canada Free Trade Agreement Mean for Foreign Investors?](https://www.thailand-business-news.com/asean/331504-what-would-an-asean-canada-free-trade-agreement-mean-for-foreign-investors)󠁿 ### 󠀁[The Changing Map of Growth: Why East Asia and the RCEP Are More Important Than Ever](https://www.thailand-business-news.com/opinion/328474-the-changing-map-of-growth-why-east-asia-and-the-rcep-are-more-important-than-ever)󠁿 ### 󠀁[Bangkok Needs to Stop Treating Every Flood as an Exceptional Event](https://www.thailand-business-news.com/opinion/332200-bangkok-needs-to-stop-treating-every-flood-as-an-exceptional-event)󠁿 To survive in fragmented global trading and investment systems, countries and businesses must diversify. To do so, Thailand should remain neutral and promote trade with and investments from all countries. Free trade agreements with more trading partners should be drawn up soonest e.g. with the European Union and other new markets such as the Middle East and India. Businesses should also diversify to more partners for both B2B and B2C. To adapt to competition from imports, business should find ways to use those imports as inputs, especially if they can help to reduce the cost production of manufacturing or service. These actions must be taken quickly as the global trading system will be reconfigured at an increasing speed from now onwards. Writer: Kirida Bhaopichitr, PhD, is a Research Director for International Economics and Development Policy and Director for the TDRI Economic Intelligence Service ( TDRI EIS) [Read More ](https://tdri.or.th/en/2025/06/surviving-trade-war-2-0-headwinds-and-tailwinds-for-thailand/?rand=86529)