Thailand’s Finance Minister Pichai Chunhavajira plans a visit to the US to discuss increasing imports of US food and motorbikes, lowering Thai tariffs and addressing trade imbalances. He aims to boost exports while managing the impact of Trump’s tariffs on Thailand’s economy.
Deputy Prime Minister Pichai Chunhavajira has said he wants to visit the United States in the next two to three weeks. Basically, the Minister of Finance says Thailand must buy more US products, including food and motorbikes. At the same time, he says the country must also reform its tariff system and open up its market to the United States to deepen trade and help boost exports.
On Wednesday evening, Thailand’s Minister of Finance and Deputy Prime Minister Pichai Chunhavajira took an earnest tone regarding the Trump administration’s announced measures on Thailand.
Firstly, Mr. Pichai said Thailand must accept the situation. In short, the US market and the relationship are simply too important.
Secondly, the country must step up importing more US products while also addressing its own tariff structures.
Pichai highlights US tariffs on Harley-Davidsons and shift in global trade order that impacts Thailand
Mr. Pichai particularly singled out the tariffs imposed by Thailand on US-made Harley-Davidson motorbikes.
Notably, this was something particularly highlighted in the Rose Garden at the White House by an assertive US President when he announced sweeping reciprocal tariff measures. However, on Wednesday and Thursday, there was a severe negative reaction to the move in financial markets.
Essentially, what President Trump has proposed is a complete reordering of the global world trade order.
Significantly, analysts in Europe warn of an unexpected threat to the European Union bloc from these moves. Indeed, this is also one of the most devastating factors presently impacting Thailand.
That is the unstoppable flow of dumped, cheap Chinese imports. This situation has already led to concerns in other global economies. For example, as manufacturers in China face high tariffs in the US, many of them are now turning to Europe.
In turn, they will dump cheaper goods, exacerbating the stress on local firms. Analysts in Europe fear that such flooding could significantly harm the economy. Indeed, just as it did in Thailand.
China’s higher tariffs and ripple effects may reshape Thailand’s trade dynamics and ASEAN relations
Further, in Wednesday’s move, China has not only been hit with another 34% tariff rate but it is now overalk labouring under a heightened level of 54%.
In addition, its secondary export points such as Thailand, Cambodia, and Vietnam have been hit hard. Vietnam received a 46% rate reduction, while Cambodia received a 49% rate reduction. This sharp rise in tariffs fon China and its ripple effects are expected to significantly influence Thailand’s trade dynamics and the broader ASEAN region.
As the tariff battle deepens, the increased likelihood of cheap Chinese goods flooding into these countries has raised alarm about market distortion. In short and more plainly, a false market driving small business concerns to the wall.The dynamic is driven by the Chinese economic model of state subsidies for exports.
At the same time, if there is even the slightest modicum of upside in all of this for Thailand, it is the differential between Thailand and Vietnam.
Therefore, this may also show Thailand the way. While the impact of the tariffs is severe, the country could potentially benefit from the opportunity. It could fill gaps left by other Asian countries and be a structural change for Thailand. Basically, it could partner with the United States.
Trump’s tariffs prompt calls for Thailand to urgently open communication channels with Washington DC
Afterwards, when Trump made his startling tariff announcement, we later found out that the worldwide surprise trade would be in effect on April 9th.
In the meantime, Thailand’s opposition and business leadership are urging the government to open up channels of communication. They argue this should happen as quickly as possible with Washington DC.
Indeed, this is certainly what Mr. Pichai was suggesting. At length, he suggested that Thailand could buy more corn and accept more food from the United States. At the same time, ham and other agricultural outputs meet a demand in Thailand that cannot be met locally.
In the meantime, a lowering of tariffs in Thailand on US imports may help not only US firms operating in Thailand but also local entrepreneurs.
Concern that Trump’s tariff moves may damage stable economic relationships between Thailand and the United States may be misplaced. Conversely, it may re-energise them.
Pichai acknowledges the costs of Trump’s tariffs on Thailand but advocates for a constructive response
Undoubtedly, there is some merit in Deputy Prime Minister Pichai’s position. However, to accommodate the world’s largest economy and reduce the trade deficit will mean more liberal access for US firms.
Furthermore, it will also mean less revenue for Thai government coffers. Deputy Prime Minister Pichai is presently advocating that Thailand responds genuinely and constructively to the US move.
Nevertheless, he is already predicting that the Trump tariff will cost the kingdom 1% of GDP. Certainly, some analysts suggest it could be 2% or even wipe out any GDP growth prospects at all in 2025.
This is because of the domino effect of Trump’s moves, which will upend world economies. Significantly, this includes the United States itself, where some economists are predicting a halt to US Federal Reserve rate cuts.
They are also predicting a higher prospect of economic recession.
Europe faces a trade nightmare as Chinese goods are now set to flood in while US market access is reduced
After that, Europe, and particularly Germany, is suffering its worst nightmare. On the one hand, reduced market access to the United States and on the other hand, a rush of cheap Chinese imports undermining already hard-pressed European manufacturers.
Significantly, it is also noted that Europe is finding it difficult to block access to substandard goods from China despite its oversight of regulations and quality standards.
China’s capacity to undercut prices in European markets is raising concerns of even further market imbalances.
“The immediate trade shock to Asia will probably reverberate back to Europe,” explains Deutsche Bank’s chief Germany economist Robin Winkler. Chinese manufacturers will try to sell more of their products in Europe and elsewhere as they face “a formidable tariff wall in the US”.
Meanwhile, Minister Pichai has also confirmed that he will travel to the United States himself in the next two or three weeks. He is determined to be at the forefront of talks with US officials and develop rapport and trust.
Thailand’s trade surplus with the US and Pichai’s plan to address it through adjusted imports and exports
Thailand has a trade surplus with the United States of $45.6 billion. Essentially, it exports $63.3 billion in goods and imports $17.7 billion. Notably, recent data from the United Nations COMTRADE has suggested this figure is only $55.11 billion.
Meanwhile, the United States is using its own official data understandably. “It would be better if he doesn’t get suspicious. So these things that we do, both what we will do, can be summarised that we are willing to adjust the trade balance between Thailand and the United States.”
“Certainly in terms of imports and to promote exports because Thailand still needs more income from exports. For instance, if the government agrees to reduce the trade surplus. On the other hand, we push for more exports, which increases international trade in another way,” said Mr. Pichai.
“Thailand is ready to take measures to reduce the trade surplus with the United States. Because if we do not take action, it will affect the Thai economic growth by 1% of GDP. The conclusion of the discussion will be detailed measures.
After that, I will travel to negotiate in the United States myself within 2-3 weeks. From the assessment, assuming that if we do nothing, the impact will be 1% of GDP.”
Meanwhile, academics are busy offering the government advice. One particularly insightful suggestion came from Associate Professor Dr. Chutathip Chongwanich.
Dr. Chutathip urges faster budget disbursements and a return to ASEAN ties to reduce trade war impact
Dr. Chutathip of Thammasat University has called on the government to speed up its budget disbursements this year. The academic appears to almost lament Thailand’s move away from a tie with its nine-nation ASEAN neighbours in favour of the United States.
“Before Thailand exported a lot to the US, Thailand’s main market was ASEAN. But when the trade war happened and we saw an opportunity to replace China in the US, we exported a lot. If ASEAN works together to improve the supply chain, even if it doesn’t cover all the losses, it should alleviate the impact.”
Certainly, while she has also called for a diversification of markets, she feels that Thailand must find a way to deal with Chinese dumping. In trust, Dr. Chutathip accepts that the kingdom must be sensitive to China’s influence in Thailand.
In brief, China is a key ally of Thailand. However, she insists that where evidence of defective or substandard goods is found, tariffs must be imposed. Previously, Indonesia has adopted such an approach to Chinese textiles.
Dr. Chutathip calls for use of RCEP dispute mechanism to address China’s influence and Thailand’s concerns
In addition, Dr. Chutathip has urged the government to use the dispute mechanism of the Regional Comprehensive Economic Partnership (RCEP) to hold China accountable.
Indeed, this points to the trade agreement which has coincided with a decline in Thailand’s manufacturing base. Manufacturers in Thailand are also looking ahead to the potential impact of US reciprocal tariffs.
The Federation of Thai Industries (FTI) has scheduled an urgent meeting to discuss how best to cope with these measures.
Trump stuns Thailand with a shocking 36% tariff on all imports to the US. GDP growth faces a wipe-out
Thailand braces for Trump’s reciprocal tariffs due on Wednesday. It’s Liberation Day for the US economy
It says tariffs on Thai exports could reach as high as 37%, which is more than triple the initial estimate from the FTI. This has spurred fears of significant repercussions for several sectors, especially the automotive and electronics industries.
The Thai automotive sector has already been suffering, and with vehicle exports down by over 18% in the first two months of the year. Many are worried that the new tariffs will further harm the industry.
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Further reading:
Trump’s trade war coming down hard on Thailand despite reports of talk. Reciprocal tariffs days away
Trump Presidency already having a heavy impact on Thailand even before he talks trade with Bangkok
Trump Presidency already having a heavy impact on Thailand even before he talks trade with Bangkok
Economy sees sharp setback with lower private spending, investment and foreign tourism income
