Latest salvo in US-China trade spat threatens Thai exports
Thailand's fragile export view and the overall economy are expected to face a double whammy after the US administration raised duties on US$200 billion worth of Chinese products to 25% from 10% yesterday morning, with Beijing vowing to immediately retaliate.
Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce (UTCC), said the decision by the Trump administration was a bit shocking because the two sides have continuously talked, seeking to ease the impasse for three months.
"The higher US tariffs will definitely jeopardise the confidence of international investors in the global economy," he said.
The world economy is expected to grow by less than 3% this year, which will affect Thai exports and tourism, Mr Thanavath said.
"We expect that Thailand's GDP risks growing less than 3.5% this year, down from 3.7-3.8% in the previous projection," he said. "This impact will make Chinese goods bound for the US market more expensive and possibly affect the US's consumer prices and the US economy in the long run."
Mr Thanavath predicted that the escalating trade war would also trim China's economic growth to 6% this year from an earlier projection of 6.4% and prompt China to beef up its exports to Asian and Asean markets, eventually leading to stiffer price competition.
Thailand is expected to see lower shipments of certain products to China, especially for those used as raw materials like plastic pellets and fruits.
"The world's slowing economy, escalating trade war and relatively strong baht are likely to whittle down Thailand's exports this year to as low as -1% from 2-3% growth earlier forecast," Mr Thanavath said.
Supant Mongkolsuthree, chairman of the Federation of Thai Industries, said the latest US decision has prompted the private sector to cut the country's export growth outlook for this year to below 3% from a previous projection of 3-5%.
He said the export forecast is likely to be cut at the next meeting of the Joint Standing Committee on Commerce, Industry and Banking, possibly held in June or July.
Mr Supant said the private sector strongly believes that higher US tariffs will affect Thailand's exports both directly and indirectly and that the country cannot avoid the impact.
Chutima Bunyapraphasara, the acting commerce minister, said the US's higher tariffs are unlikely to much affect the overall trade momentum between Thailand and China and Thailand and the US, as the products subject to higher tariffs are the same categories on which the US imposed earlier higher tariffs in the first round in September 2018.
The overall global economy will face a major impact, she said, as the latest decision by the US will likely dampen the world's economic prospects.
"This may offer Thailand a chance to export more to the US market to substitute Chinese goods," Ms Chutima said. "But at the same time we would also face tougher competition from other exporting countries like Mexico, Vietnam, South Korea, India and Taiwan, and certain Thai exports such as automobiles and auto parts, household electric appliances, machinery and parts, and electronics, as key parts of China's supply chains, would unavoidably be hit."