Bangkok: SCB EIC estimates that the Thai economy is facing significant pressure due to the 36% import tax imposed by the United States on Thailand, which has already led to a reduction in Thai exports to the US by 810 billion baht over the past five years. The focus now shifts to Thailand’s negotiations with the US after former President Donald Trump delayed the enforcement of these tariffs for 90 days, highlighting the broader impact of the US-China trade tensions on Thailand’s economy. SCB EIC anticipates that GDP growth in 2025 will fall below 2% and urges SMEs to adapt swiftly.
According to Thai News Agency, Dr. Punyawat Srisingh, Senior Economist at the Economic and Business Research Center, Siam Commercial Bank (SCB EIC), addressed the impact of Trump’s recent decision to temporarily suspend the enforcement of the reciprocal tariff measure. While the 36% tariff is on hold, a basic additional tariff of 10% remains, except for countries retaliating against China, which now faces an increased import tax rate of 125%, up from 104%.
SCB EIC highlights that Thailand is significantly affected by these tariffs, as it is subject to one of the highest rates compared to other countries. This situation poses a severe threat to Thai exports, which heavily depend on the US market. Consequently, the reduction in exports is expected to extend to countries affected by the tariff increases, potentially leading these nations to import more from the US, ultimately reducing their imports from Thailand. Additionally, Thailand’s exports to China are likely to decrease due to China’s economic slowdown, further disadvantaging Thailand in global competition.
Over the past five years, Thailand’s reliance on exports to the US has grown, accounting for 20% of its total exports. Simultaneously, 25% of Thailand’s imports come from China. If Thailand fails to secure favorable negotiations with the US, the economic repercussions could be severe. Domestically, the fragile state of households and the business sector, combined with a slow production recovery, compounds these challenges. Although the government has provided some support, it is likely to be more limited than previously. Consequently, GDP growth in 2025 is projected to potentially fall below 2%, particularly in the latter half of the year, where it might only reach around 1%.
The 90-day delay in tariff enforcement provides a window for potential changes, though the situation remains uncertain. The increased US tariff on China to 125% is a significant issue that could further impact Thailand’s economy. Thailand must swiftly address the implications of the Trump 2.0 policy by enhancing competitiveness through proactive government measures and legal adjustments, especially as the trade war increasingly affects SMEs.
Ms. Chotika Chummee, Manager of the Agricultural and Manufacturing Products Business Group at SCB EIC, noted that the business sector will face various impacts from the US’s Reciprocal Tariffs policy. The most affected product groups are those heavily reliant on the US market and likely to lose market share, including automotive parts, electronic parts, steel, rubber, and fishery products, particularly shrimp. Intermediate and downstream products are also vulnerable to the global economic slowdown and the influx of Chinese products into Thailand.
The 36% Reciprocal Tariffs are expected to reduce Thai exports to the US by an accumulated 810 billion baht over five years. However, the 90-day delay in tariff enforcement may mitigate some impacts. Entrepreneurs are encouraged to implement the 4P strategy immediately to gain a competitive edge in this tariff conflict and to use the crisis as an opportunity to restructure Thailand’s production for enhanced competitiveness.