To mitigate harm from the deepening China-US trade spat, the government is drafting a watch list for items expected to be redirected into Thailand in light of higher retaliatory tariffs by the two countries.
Deputy Commerce Minister Chutima Bunyapraphasara, who chaired yesterday's meeting with related parties from the government and the private sector, said in evaluating the escalating China-US trade war that Thailand could become a dumping ground for the two nations' products, affecting local industries.
"The Foreign Trade Department has been tasked with drawing up watch lists and reporting items that may flood the Thai market, probing whether foreign companies are circumventing trade rules for products subjected to higher tariffs," Ms Chutima said. "Thailand is ready to apply safeguard measures to protect local industries."
Circumvention practices include the minor modification of goods, leaving the essential characteristics unaltered; the export of goods (with minor modifications) from third countries; and the exporter reducing prices to skirt the full extent of the dumping duties, thereby prolonging the injury that the measure was intended to prevent.
Ms Chutima said Thai shipments of washing machines and solar cells have already been negatively affected by the US tariffs designed to protect American manufacturers, with exports of steel and aluminium anticipated to fall accordingly.
Chutima: Thailand ready for safeguards
On Jan 22, US President Donald Trump approved safeguard tariffs on imports of large residential washing machines and solar cells and modules, a measure intended to protect domestic manufacturers, to the detriment of mostly Chinese and South Korean makers.
Imported washing machines are subjected to a 20% tariff, while solar panels are taxed 30%.
On March 8, Mr Trump ordered a steep 25% tariff on steel and 10% tariff on aluminium imports to the US, citing national security considerations under Section 232 of the Trade Expansion Act of 1962.
In retaliation, China on March 22 announced tariffs on US$3 billion (100 billion baht) worth of US goods.
On April 2, China announced more tariffs on US imports, including a 25% levy on US pork and recycled aluminium, and a 15% tariff on 120 American products, including wine, fruit, nuts and steel pipes.
Both sides have since made additional threats.
"It remains to be seen whether Thailand will be adversely affected by the trade spat, but we expect positive and negative effects for Thailand," Ms Chutima said. "But if the trade rift deepens, it will definitely affect financial and capital markets, as well as the overall world economy."
Korrakod Padungjitt, secretary-general of the Federation of Thai Industries iron and steel club, said Thai steel pipe has been granted an exemption from the US tariff, leaving only cold-rolled steel to face the 25% tariff.
Thailand exports 60,000 tonnes of cold-rolled steel to the US annually. Thailand would lose an estimated 1.4 billion baht if such shipments were halted to the US market.
Mr Korrakod said Thai businesses are most concerned about seamless pipe, as some Chinese steel makers are asking for privileges to establish factories here.
Those factories would then import steel from China, repacking it for re-export as Thai pipe products.
"We believe the US authorities are keeping an eye on this practice," Ms Chutima said. "So we've tasked the Foreign Trade Department with investigating the issue."