Trump's Tariffs Cast Shadow Over Thailand's Economic Outlook
The Thai economy is bracing for significant headwinds following the implementation of substantial tariffs by the Trump administration on goods from all US trading partners. This development has sparked concerns of a global economic slowdown, with Thailand, heavily reliant on exports, facing a particularly challenging outlook.
In 2024, Thailand's Gross Domestic Product (GDP) grew by 2.5%, a rate that, while an acceleration from the previous year's 2.0%, fell slightly below earlier projections. Exports played a crucial role, contributing nearly 65% to the nation's GDP.
The United States has historically been a key export destination. In January 2025 alone, Thailand's total exports to the United States of America reached USD 4.778 billion. However, this robust export figure contributed to a significant trade surplus with the States, which stood at USD 45.6 billion in 2024, ranking Thailand as the 11th largest surplus holder with the United States.
Key Thai exports to the States include electronics, machinery, rubber, and auto parts.
Photo Credit: Pattaya Mail
In response, the Thai government, led by Prime Minister Paetongtarn Shinawatra, is actively seeking negotiations with the US to mitigate the tariffs' impact. Strategies being considered include increasing imports of U.S. goods such as energy, aircraft, and agricultural products, as well as easing existing import restrictions. The aim is to demonstrate Thailand's reliability as a trading partner and explore avenues for a mutually beneficial resolution. Despite these efforts, the shadow of Trump's tariffs looms large over Thailand's economic prospects for the remainder of 2025 and beyond.
The newly imposed reciprocal tariff of 36% on Thai exports to the States is expected to have a considerable negative impact. The Federation of Thai Industries (FTI) estimates potential revenue losses of approximately 900 billion baht for Thailand. Economists predict this tariff could slash Thailand's GDP growth rate by 1.1 percentage points from previous forecasts. Before the tariffs, projections for Thailand's 2025 GDP growth hovered around 2.5% to 2.8%, but these figures are now under threat. Some experts warn of a potential GDP contraction over two consecutive quarters. The Stock Exchange of Thailand (SET) has already seen a downturn following the tariff announcement.
Analysts have voiced considerable concern regarding the potential negative impacts of the U.S. tariffs on Thailand's economy. Experts predict a significant blow to Thailand's export sector, likely leading to a broader economic slowdown, as evidenced by US importers placing orders on hold and a drop in the Stock Exchange of Thailand index.
Photo Credit: The Nation
The Thai government has initiated a multi-pronged strategy to mitigate the impact of the US tariffs. Key actions include:
Direct Negotiations: Prime Minister Paetongtarn Shinawatra has emphasised a "quick and precise" negotiation strategy with the U.S., with Finance Minister Pichai Chunhavajira leading the delegation to Washington to engage with the U.S. Trade Representative (USTR) and other stakeholders. The government aims to convey that Thailand is a reliable ally and economic partner, not just an exporter.
Increasing US Imports: Thailand has offered to increase imports of goods, including corn, soybeans, crude oil, ethane, liquefied natural gas, automobiles, electronics, and aircraft. They are also reviewing rules on imports of pork. This is a key tactic to reduce the significant trade surplus.
Addressing Non-Tariff Barriers: Thailand plans to revamp its import duty structure and reduce non-trade barriers on approximately 100 US items to ease trade friction.
Strict Enforcement of Origin Rules: To counter US concerns about transshipment, Thailand will implement stricter controls on issuing certificates of origin to ensure goods genuinely originate from Thailand.
Promoting Thai Investment in the US: Encouraging Thai companies to invest in the US, particularly in agriculture and energy, is seen as a way to foster a more balanced economic relationship.
Providing Support Measures: The government is planning soft loans worth THB 5 billion for firms exporting to the US and importing goods, as well as support for the agricultural sector.
Diversifying Export Markets: The government is urging Thai exporters to seek new markets to reduce reliance on the US and is accelerating free trade agreement negotiations with other regions like the Middle East, Europe, and India.