Reciprocal tariffs imposed by the United States could result in economic losses for Thailand of 359 billion baht, reducing gross domestic product (GDP) by nearly 2%, according to the University of the Thai Chamber of Commerce (UTCC).
The reciprocal tariffs on Thailand, which will take effect on April 9, will be 37%, according to an annex in the executive order issued by President Donald Trump on Wednesday.
He displayed a chart showing a rate of 36% for Thailand, but it emerged later that the rates on the chart for a number of countries were one percentage point lower than the official rates shown in the annex.
Thanavath Phonvichai, the UTCC president, said US tariff hikes to 25%, announced earlier and taking effect this week, would impact four product categories: steel, steel products, aluminium, and automobiles and auto parts
The total export value for these categories in 2025 is projected at US$4.73 billion. Following the tariff hikes, the export value is likely to decrease to $4.08 billion, representing a loss of $650 million or 22 billion baht, a study by the university found.
The tariffs may encourage an influx of Chinese products into the Thai market, especially machinery, furniture, miscellaneous goods, electrical equipment, electronics and textiles, as China seeks alternative markets for its exports, he said.
Mr Thanavath said that when combined with the recent earthquake, Thai economic losses are estimated to reach 375 billion baht, a GDP decline of 2.02%.
Consequently, the university has reduced its GDP growth forecast for this year to just 1%.
Dhanakorn Kasetrsuwan, president of the Thai National Shippers’ Council (TNSC), said several industries were likely to feel the effects from the higher tariffs.
Each industry is assessing potential damage, with a more definitive analysis anticipated by May.
“The TNSC anticipates this change could influence exports in the second half of the year, and may review its initial export target of 1-3% growth for this year in the second quarter,” said Mr Dhanakorn.
Bargaining power
The council outlined proposals to address the challenges posed by tariff hikes, including accelerating negotiations with the US by promoting Thai investment, increasing imports of necessary goods from the US to reduce the trade surplus, and using the Asean+ approach to enhance bargaining power.
Thailand should accelerate free trade agreement negotiations with other key trading partners to mitigate trade risks and expand export opportunities, he said.
To improve Thailand’s international trade and investment system, the proposals focus on encouraging investment using Thai raw materials, involving domestic suppliers, promoting environmentally friendly industries and transferring advanced technology to upskill Thai labour.
The council also calls for stricter inspections on imported goods that might circumvent US regulations.
To improve competitiveness, the TNSC proposed reforms in logistics and trade facilitation to reduce costs, including addressing port congestion and improving systems like the National Single Window and Port Community System.
Negotiations urgent
Visit Limlurcha, president of the Thai Future Food Trade Association, said that in the ready-to-eat food segment, the tariff hikes will significantly impact exports of canned tuna as well as canned vegetables and fruit.
However, it is crucial to compare the reciprocal tariff rates with those of competitors like Vietnam, the Philippines, China and Indonesia, all of which also have a strong presence in the US market.
Despite the hurdles, Thailand’s ready-to-eat food exports increased by more than 20% in 2024.
Without the tariff increases, growth this year could have mirrored or even exceeded that rate, said Mr Visit. A thorough review might be necessary under the current circumstances, he added.
To navigate difficult business conditions over the next few months, Mr Visit suggested that Thai producers focus on managing production costs, inventory and planning.
Specifically, for companies that have accepted orders 6-9 months in advance, it is essential to confirm with US importers regarding any potential delays in deliveries. If there are significant stocks already held by importers, this could lead to further postponements.
There is an urgent need for the government to engage in negotiations with the US as soon as possible, ensuring the tariff rates remain competitive, he said.
In addition, the government must address concerns about products from China being rerouted through Thailand to escape tariffs, as China has substantial investments in Southeast Asian countries.
Regarding the US pushing for Thailand to import its pork, Mr Visit said it is important to acknowledge Thai consumers’ concerns regarding the health impacts linked to the use of growth hormones in US pork. However, there may be an opportunity to import offal as raw material for pet food to boost protein content.
Suriyon Sriorathaikul, managing director of Beauty Gems, a producer of gems and jewellery, said the government needs to take urgent measures to support local producers, particularly those most affected by the changes.
Immediate action could include reducing interest rates to zero or providing relief similar to that offered during the pandemic.
Thailand exports gems and jewellery products worth 400 billion baht annually, with 10-20% of those exports going to the US.
