Will Trump’s return affect trade with Thailand?

The US presidential election in November 2024 is expected to have multifaceted global impacts, affecting the economy, trade, interest rates, inflation and geopolitical conflicts among others.

A CNN poll found that 70% of Americans believe the Democrats could win if they replace President Joe Biden with another candidate.

Ath Pisalvanich, an independent scholar and international economics expert, highlighted potential global economic risks if Donald Trump were to return as president. During Trump’s previous term (2017-2020), he pursued protectionist and exclusionary economic policies, waging a trade war against China.

What if Trump returns?

If Trump returns, policies like “America First” are expected to intensify, affecting countries like Thailand, which have significant trade surpluses with the US.

Industries linked to the US could also face higher import tariffs and scrutiny of Chinese manufacturing bases that relocated to Thailand and ASEAN for export to the US. This poses risks of dumping and higher tariffs.

Thailand’s trade with the US could be significantly affected, especially given Trump’s nationalist policies that may result in withdrawal from international agreements like the WTO, TPP, UNESCO, the Iran Nuclear Agreement, and the Paris Agreement.

“The US-China trade war will worsen as it was sparked during Trump’s tenure. The impact on Thailand must be monitored, especially in the electric vehicle [EV] sector, as several EV companies have established production bases in Thailand for domestic markets and exports. Currently, US tariffs on EVs from Chinese production bases have risen to 102.5% from 27.5%. Future tariffs on Chinese-made EVs produced in Thailand and exported to the US could rise if sold cheaply, affecting other goods produced in Thailand and other countries,” Ath warned.

Escalation of conflicts

Geopolitical conflicts are another risk, especially in the Middle East, where Trump’s support for Israel could worsen tensions. Trump could also reduce reliance on Taiwan for computer chips, opting for domestic production, and not support Taiwan if a war were to break out with China.

Similarly, with the Russia-Ukraine conflict, Trump would likely reduce financial and weapons support for Ukraine and instead try to negotiate with Russia to end the war. This will possibly lead to economic recession in Europe and drag down the global economy.

“If Trump wins this election, it will clearly indicate that Americans prioritise their economy, similar to how the United Kingdom chose Keir Starmer as prime minister for his economic stimulus policies,” Ath added.

Chaichan Charoensuk, president of the Thai National Shippers' Council, concurred, saying that if Trump wins the election, the trade war with China will possibly intensify.

Impact on Thailand

The US trade war is primarily with China, but Thailand could be indirectly affected as China has relocated its production bases to the kingdom to export goods to the US. However, low-priced exports from Thailand could face stricter scrutiny, impacting domestic industries and posing a risk of US trade retaliation.

Over the past decade (2013-2023), even during Trump’s tenure, Thai exports to the US grew by 112%, with the export of cars and car parts tripling, electronics rising sevenfold, car tyres doubling and steel tripling.

“These figures during the US-China trade war under Trump and Biden indicate that Thai exports to the US continued to grow, partly benefiting from replacing Chinese goods in the US market. Currently, the US is Thailand's top export market, accounting for 18% of exports in the first five months of 2024, with a 12% increase,” Chaichan said.

However, if Trump returns, then public and private sector agencies must demonstrate that Thailand is a good partner and trades fairly with the US. Additionally, monitoring the US-China trade war’s intensity and impact on Thailand is crucial for planning and improving production standards to meet US requirements.

“Thai exporters are closely watching the US election as it will impact US trade policies, potentially affecting Thai exports both positively and negatively. Currently, exporters are concerned about rising shipping costs due to geopolitical conflicts, with shipping rates to Europe rising from an average of US$1,500 [about 54,300 baht] per 20-foot container to $4,500-$5,500, or four times higher, as ships detour around the Cape of Good Hope in South Africa, adding 20 days to the journey,” he said.

Trade statistics

Thailand-US trade in 2023 totalled 2.36 trillion baht, up 4.06% from the previous year. Exports were 1.68 trillion baht, up 2.21%, while imports were worth 679 billion baht, up 8.94%, resulting in a trade surplus of 1 trillion baht.

In the first five months of 2024, Thailand-US trade reached 1.05 trillion baht, up 14.73%, with Thai exports recorded at 760 billion baht, up 18.40%, and imports at 296 billion baht, up 6.26%, resulting in a trade surplus of 464 billion baht.

The top five Thai exports to the US are computers and parts, rubber products, fax machines and telephones and parts, semiconductors, transistors, and diodes, and jewellery and accessories. The top five Thai imports from the US are crude oil, machinery and parts, chemicals, electric circuit boards, and natural gas.