FTI eyes ‘war room’ to tackle potential US trade barriers

The Federation of Thai Industries (FTI) has called for the creation of a dedicated “war room” to address potential trade challenges resulting from policy changes under US President-elect Donald Trump, especially since Thailand’s industrial sentiment is slumping. 

At a monthly briefing on Monday, FTI chairman Kriengkrai Thiennukul highlighted Thailand’s need to prepare for increased trade barriers under future US policies. “The world is very worried about these measures,” he said, citing the International Monetary Fund’s projections of US tariff increases of 10-20% on trading partners, with China possibly facing hikes of 60-100%. 

Kriengkrai Thiennukul

To strengthen Thailand’s export sector, the FTI has proposed two key strategies: first, the establishment of a “war room” of skilled lobbyists to help navigate US trade policies and mitigate their impact on exports. Second, the FTI advocates for diversifying export markets to reduce reliance on the US, following China’s example, which has reduced its dependence on the US market from 27% to less than 20%. 

Meanwhile, the Thai Industry Sentiment Index (TISI) fell to 90.1 in December last year from 91.4 in November, reflecting concerns over several factors, including reduced manufacturing due to extended holidays, the ongoing flood crisis in the South and rising prices of agricultural goods that have negatively affected food processing industries. 

The automotive sector, meanwhile, faced a significant contraction, with sales dropping by 31.34% in November, while cautious lending practices further affected the construction sector. Increased competition from Chinese products has also added pressure on both domestic and ASEAN markets. 

Despite these challenges, some positive developments have emerged, such as the successful establishment of Thailand’s free trade agreement with the European Free Trade Association (EFTA) and an 85.58% increase in the use of free trade agreement (FTA) privileges from January to September 2024. The electronics industry continues to expand robustly, and tourism is seeing steady growth, bolstered by streamlined entry procedures. 

Meanwhile, the TISI forecast for the next three months shows a decline to 95.5 from 96.7, with additional concerns over minimum wage increases and potential US trade barriers.

The FTI has made several recommendations for government action, including support measures for small and medium-sized enterprises affected by the minimum wage increases, the introduction of energy conservation initiatives, the acceleration of trade agreement negotiations – especially with the European Union – and the development of comprehensive strategies to effectively address US trade policies.

"The FTI aims to strengthen Thai Industries for a stronger Thailand," concluded Kriengkrai, reinforcing the organisation's commitment to industrial development and economic resilience.