US President Donald Trump's second term in office has captured the attention of the Thai business sector, as his "Golden Age of America" vision focuses on bolstering the American economy by hiking tariffs and relocating production bases to the US.
These strategies are expected to reshape global trade dynamics, with neighbouring nations Canada and Mexico the first to experience the impact from Trump's first day in office.
Trump's protectionist stance, including bold moves such as withdrawing the US from the World Health Organization, signals his commitment to campaign pledges.
The Thai business sector is preparing for the potential impact, especially if the US implements aggressive policies against China, the world's second-largest economy.
TRADE TALKS IN STORE
Thailand needs to prepare for negotiations with Washington to expand trade with the US and strengthen trade with other countries as Trump 2.0 policies to hike tariffs on imports bound for the US loom, said the Federation of Thai Industries (FTI).
"We need tenacious lobbyists who can successfully ensure benefit sharing through win-win negotiations," said Kriengkrai Thiennukul, chairman of the FTI.
A strong negotiation team must be built to prepare for trade talks with US officials as Trump prefers bilateral talks to multilateral talks, he said.
The FTI suggests the government set up a "war room" to monitor and assess new trade policies under the Trump administration.
Though the US president says he wants to better protect America's domestic industries, Thailand should find ways to win Washington's support for new business opportunities in the US market, said Mr Kriengkrai.
Thailand must also accelerate negotiations for a free trade agreement with the EU, seeking markets to offset any US decline, he said.
Thailand, a major trading partner of the US, risks facing US tariffs of 10-20% on its exports under the Trump administration, Mr Kriengkrai said earlier.
The country had a trade surplus of around US$20 billion with the US in 2020. The surplus later increased by 11%, making Thailand the 12th-largest current account surplus holder with the US last year.
According to media reports, Trump is considering slapping a 10% tariff on Chinese imports and a 25% tariff on imports from Canada and Mexico.
"No matter whether Trump imposes a 10% or 60% tariff on Chinese products, Thailand and countries in Asean will bear the brunt," said Mr Kriengkrai.
Trump said on the campaign he would impose tariffs of 10-20% on all imported products, and tariffs of 60-100% on goods imported from China.
The FTI expects the trade war between China and the US to cause Chinese entrepreneurs to export more products to Asean member states. This means Thailand may face a stronger flood of low-cost Chinese imports flowing into the country.
An aerial view of Bangkok Port in Klong Toey district. Thai exports could feel the effect from higher US import tariffs.
THREAT TO EXPORTS
Nond Prueksiri, senior economist at SCB Economic Intelligence Center (EIC), said he is concerned a potential trade war could affect the Thai economy in the second half of 2025.
"Trade barriers imposed by the US and other countries might cause the Thai economy to expand less than our estimate," he said.
EIC projected 2025 GDP growth of 2.4%, less than its estimate of 2.7% for 2024.
Trade barriers imposed during Trump's first term were not eased during the Biden administration, said Mr Nond.
"Uncertainty surrounding Trump 2.0 trade policies could negatively affect world trade, causing Thai trade to decline," he said.
EIC anticipates Thai export growth of 2% this year, down from 5% last year.
"Exports make up more than half of Thai GDP. If exports decrease, the economy could not avoid the impact. To cope with this, the country must try hard to increase its bargaining power in global trade," said Mr Nond.
Meanwhile, if Chinese goods are subjected to higher trade barriers in the US market, manufacturers will find other markets for their products, he said.
"Even with US trade barriers, Chinese manufacturers won't produce less -- they will simply ship their products to other markets, including Thailand. In this situation, Thai manufacturers would face fierce competition in the domestic market," said Mr Nond.
Therdsak Thaveeteeratham, executive vice-president of Asia Plus Securities, said Thai exports could be pressured by Trump import tariffs of 10% on all countries.
The US trade deficit with Thailand has increased since 2018. Thailand's main export products to the US are electric and electronic appliances, machinery, and rubber products.
MODERATE APPROACH
Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), said the first batch of executive orders signed by Trump focus on energy and border issues.
"These orders deal with energy production, including production permits in Alaska, as well as border and immigration issues. There has been no announcement on the tariff war yet," he said.
Trump said he is considering setting up an "External Revenue Service" to study the trade situation with China, Canada and Mexico, in preparation for the imposition of new tariffs.
"We expect a modest, gradual approach on tariffs against US counterparts. We maintain our baseline case that a trade war will occur soon, but the degree of tariffs will not be harsh," said Mr Rakpong.
KGI predicts the two most plausible options are an additional 10% US tariff on Chinese goods, on top of the 20% enacted during the Biden administration, or a gradual increase such as a 2-3% rise in the tariff rate per month until it reaches 10%.
"We are optimistic that global financial markets have largely priced in both options, so the negative market reaction should be limited once the details are announced," he said.
"Trump seems to realise the threat from inflation if the tariffs drive import prices higher, so he is pushing for lower energy and gas prices in the US."
Passengers take in the sights and sounds of Bangkok during a cruise along the Chao Phraya River. Tourism operators believe the sector won't be affected by Trump administration policies. Apichart Jinakul
MIXED IMPACT
Somjai Phagaphasvivat, an independent political and economic analyst, said Trump's policies could potentially reduce global trade growth.
In terms of global trade growth, an initial projection by the International Monetary Fund of 3.3% this year may need to be downgraded to 2%, said Mr Somjai.
Global GDP growth, originally projected to reach 3%, might only tally 2% as a result of Trump policies, he said, which would negatively impact Thailand's export sector.
Another indirect impact for Thailand from Trump's policies could be higher inflation, which might slow the Federal Reserve's planned interest rate cuts, said Mr Somjai.
He said US interest rates could potentially stall or even rise, according to some leading global economists. It is clear the pace of US interest rate reductions will slow, strengthening the dollar, said Mr Somjai.
As a consequence, the baht would weaken, which would benefit Thai exports, but the country would face US tariff barriers, he said.
Trump's policies could slow China's economic growth, affecting Thailand because it is reliant on China for exports, tourism and foreign direct investment (FDI). Chinese investments play a significant role in Thailand's economy, said Mr Somjai.
If Chinese exports to the US weaken due to tariff barriers, they may flood other markets, including Thailand, he said.
In terms of the direct impact on Thailand, the country may face US import tariff increases of 10-20%, said Mr Somjai.
The US is likely to target Thailand due to its current account surplus with the US, making it essential for the country to strategise for trade negotiations with Washington, he said.
Regarding possible positives from Trump's policies, Mr Somjai said they could lead to a relocation of production bases to Thailand. FDI flows into Southeast Asia are already significant. Last year, Thailand recorded its highest FDI levels in more than a decade, resulting in a shortage of investment space in the Eastern Economic Corridor.
In addition, he said there could be repercussions referred to as "secondary sanctions". Primary sanctions involve targeting China through tariff increases, while secondary sanctions target companies or countries where Chinese firms relocate their production bases. Thailand may face scrutiny from the US on Chinese factories, said Mr Somjai.
"Thailand needs to negotiate with the US if import tariffs on Thai products are increased. Trump announced plans to impose a 10-20% import tariff on all countries, but the final outcome will depend on Thailand's negotiation skills," he said. "The US is allegedly targeting countries that have a current account surplus with it, and negotiation could determine whether Thailand avoids higher tariffs."
The US may impose uneven tariff increases for different countries, depending on each country's negotiation efforts, said Mr Somjai. If Thailand manages to secure lower tariffs than its competitors, it will gain a competitive edge, he said.
NO HARM TO TOURISM
Thanate Vorasaran, chairman of the Thai Chamber of Commerce's high-quality tourism committee, said Trump 2.0 should not affect tourism as much as the export sector.
He said the flow of foreign tourists, including those from the US, should not be disrupted by the change in administration. Last year the number of tourists from the US entering Thailand tallied 1 million, making it the second-largest long-haul market.
Trump pledged to end the Russia-Ukraine war as soon as possible, and Mr Thanate said if peace comes to that region, it would ease the economic burden, particularly for Europe.
If Europe's economy improves, more Europeans may take overseas trips, including to Thailand, he said. Russia became the largest long-haul market for Thai tourism last year, and it would continue to grow rapidly if the war ends, said Mr Thanate.
However, he said given concerns that Trump's policies could decelerate China's exports and its economy, Thailand must implement more active campaigns to attract tourists from China, as well as other potential markets to offset the stagnant mainland market.
Thienprasit Chaiyapatranun, president of the Thai Hotels Association, said Trump's policies signal an unfriendly stance toward the LGBTQ+ community and gender diversity.
With Thailand legalising same-sex marriage, the country should promote itself as a world-class LGBTQ+-friendly destination, either for travel or as a location for wedding ceremonies, he said.
SCB EIC estimates Thailand's exports expanding 2% in 2025. Nutthawat Wichieanbut
STRATEGIC NEGOTIATIONS
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the chamber believes the US administration is likely to impose steep tariff hikes that could significantly affect Southeast Asia, particularly Vietnam and Thailand, as both have considerable trade surpluses with the US.
Although Trump has not signed any orders on Chinese tariffs yet, he mentioned in interviews he is considering the move.
The US president also signalled his intention to enhance US control over vital strategic locations, including the Panama Canal, which could affect international trade routes, resulting in higher transport costs for Thailand.
The chamber proposed three urgent recommendations for the government, with the first a public-private collaboration to develop a strategic national action plan to respond to Trump 2.0 policies.
Second, each ministry should promptly assess the impact of Trump's policies on various sectors and ensure data is integrated across sectors.
Thailand must prepare proposals to align with Trump's objectives, even if they cover multiple sectors, to strengthen its leverage in negotiations, according to the chamber.
Lastly, while the government already set up a working group to negotiate with the US, the chamber suggests appointing a special envoy or expert representatives from both the public and private sectors to join the team. These representatives should have in-depth knowledge and negotiations must be conducted collectively as a comprehensive package.
OPPORTUNITY AMID A CRISIS
Chaichan Charoensuk, chairman of the Thai National Shippers' Council, said the gradual introduction of US policies indicates tariff hikes on Chinese imports will be implemented in a phased manner.
This reflects the complexity and importance of supply chains in the globalisation era, said Mr Chaichan. Rapid changes could significantly impact the production and consumption sectors in the US.
He said Thailand should view the trade war as an opportunity in a crisis, as there are several potential upsides. First, the relocation of manufacturing bases for electronics and electrical appliances is possible, said Mr Chaichan.
In the fourth quarter of 2024, manufacturers ramped up their exports.
Meanwhile, new investors, including Chinese and non-Chinese, have relocated their operations from China to Thailand, presenting an opportunity for the country. The challenge is developing a skilled workforce, as new factories use advanced technology, making it vital to improve the skills of Thailand's employees, he said.
However, Thailand is transitioning to an ageing society, making knowledge transfer from one generation to the next essential, said Mr Chaichan. The country must also manage energy costs, labour costs, and develop a robust logistics system, he said.
Thailand needs to enhance its logistics network across sea, land and air transport to establish itself as a regional logistics hub, strengthening its supply chain.
Meanwhile, as the US scales back on electric vehicle (EV) subsidies, there is an opportunity for a resurgence of internal combustion engine (ICE)-powered vehicles, said Mr Chaichan.
Thailand should gear up to manufacture both high-performance ICE vehicles and EVs, aiming to become a production hub for both types and their components, he said.
Thailand should also maximise the benefits of its 15 free trade agreements (FTAs), particularly those with Asean and the Regional Comprehensive Economic Partnership, said Mr Chaichan.
The country can also tap European markets through its FTA with the European Free Trade Association.
