All eyes are on next week's US presidential election as the political and economic policies of the world's biggest economy impact every nation across the globe, including Thailand.
Republican nominee and former president Donald Trump is bidding to return to the White House, having led the country as the 45th president from 2017 to 2021. Current US President Joe Biden assumed office as the nation's 46th president on Jan 20, 2021. He withdrew his candidacy for the election in July, endorsing his Vice-President Kamala Harris as the Democratic nominee.
The two candidates offer a stark contrast in policies, leading Thai economists and business leaders to predict widely varying effects on the Thai economy depending on the victor in what is expected to be a close race.
However on some issues, observers believe no matter who wins the election, the consequences for Thailand are unlikely to be positive.
PROTECTIONISM TO ENDURE
Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organizations, said he does not expect there to be much difference between the candidates in terms of US protectionism.
"During the Biden administration, the trade war between the US and China did not ease, as tariff hikes and other trade barriers did not decrease," said Mr Kobsak, who is also senior executive vice-president of Bangkok Bank.
"The difference is Trump has an 'America First' policy, while Kamala Harris does not," he said.
In Mr Kobsak's view, the US is clearly being defeated by China in the tech war.
"If this continues, the US will lose more. That's why Washington has come out with several measures to disadvantage Beijing, while the US is still the world's No.1 economy," he said.
Chinese companies have been expanding their businesses into several countries, notably Vietnam and Thailand, said Mr Kobsak. These overseas production facilities not only serve the Chinese market, but also export to other markets worldwide.
"Even Mexico welcomes Chinese companies to set up manufacturing plants in the country, exporting to the US by using tax privileges under the North American Free Trade Agreement," he said.
The London-based Economist Intelligence Unit (EIU) predicts Mr Trump to win according to its baseline forecast, noting he is likely to implement "abrupt shifts in terms of the US position towards key international conflicts", along with relations with traditional allies and the country's approach to global trade and climate policies as he pursues the America First agenda.
The diffusion of global power and uncertainty over the direction of US foreign policy underpins the rise in geopolitical risk, noted the EIU.
"We assess that China, Germany and Mexico will be among the more affected nations owing to their trade surpluses with the US and exposure to higher US tariffs," reported the think tank.
EMERGING MARKETS MAY SUFFER
Therdsak Thaveeteeratham, executive vice-president at Asia Plus Securities (ASPS), expressed concerns over possible negative impacts if Mr Trump wins the election.
If Mr Trump wins, it is widely anticipated the US corporate tax rate will be cut from 21% to 15% and America First policies will return, causing the US-China trade war to escalate, he said.
In addition, import tariffs on Chinese goods would be hiked to 150-200%, with global currencies fluctuating and US inflation running hot for longer, while US stock markets would rally, said Mr Therdsak.
"Mr Trump has talked about very high import tariffs," he said. "If the trade war heats up, global trade will slow, affecting the Thai economy."
Meanwhile, lower US corporate tax rates would boost the earnings of companies trading on US bourses, said Mr Therdsak.
"US market earnings grew strongly under the Trump administration," he said. "When listed US companies perform well, it could limit fund outflows from US stock exchanges to emerging markets, including Thailand."
According to ASPS, Thailand's exports may be affected by fiercer competition with China, especially for goods subject to US tariffs policies, such as petrochemicals, electric appliances, steel products and auto parts.
Nattawut Chanthanachulphong, strategist at Krungthai X Spring Securities, said the baht would continue its slide as the dollar strengthens if Mr Trump wins.
"If Mr Trump wins, the US government's massive spending is likely to cause US inflation to stay at a high level, making it harder for the Federal Reserve to cut interest rates. That would continue to support the dollar's strength," said Mr Nattawut.
Mr Trump makes a point on Oct 23 during a campaign event held in Duluth, Georgia.
CHINA STRATEGY TO PERSIST
Sompop Manarungsan, president of the Panyapiwat Institute of Management, said if Ms Harris wins, US economic policy towards Thailand, Asean, and even China would likely continue in the same direction as the past 3-4 years, with a focus on decoupling from China.
He said the US believes that without such a policy, China will become a rival economically, which would impact US security.
"If Ms Harris becomes president, the US would intensify its anti-China policies, especially concerning Chinese goods manufactured overseas, such as those produced in Thailand and then exported to the US," said Mr Sompop.
For instance, Thailand was recently sanctioned by the US over solar panels produced here by entities that received investment from Chinese companies.
However, if the US imposes more sanctions on China, it could backfire, as many US-made products rely on the Chinese market, he said. For example, Intel depends on the Chinese market for up to 21% of its sales of chips and semiconductors.
Mr Sompop said Mr Trump would primarily focus on the economy, operating on a quid pro quo basis. For instance, if a country wants something from the US, it will need to offer something in return, even in matters of security.
Mr Trump recently threatened that if China invades Taiwan, the US would impose a 200% tariff on Chinese goods, showing that he is focused on business and the economy, said Mr Sompop.
"Mr Trump's approach is deal-making diplomacy. If the US benefits more, he will concede. His America First policy will persist if he becomes president," he said.
Mr Sompop said another Trump administration would seek to revive the US real sector, moving away from a reliance on the service and financial sectors. This shift could change the direction of global trade and investment.
If Mr Trump wants to revive US industries, Mr Sompop said his most effective tool would be raising tariffs to restrict imports, as he has said he is ready to impose an additional 10-20% tariff on nations with significant trade surpluses with the US, referring to a surplus of more than US$30 billion. Major competitors such as China may even face tariffs as high as 60%.
If these policies are implemented, they will disrupt the global supply chain, affecting trade, investment, production, and services such as logistics, he said.
"However, I believe this issue could be negotiated with Mr Trump regarding trade with the US. I think Mr Trump will not prioritise political and security issues as dominant factors in the way that Mr Biden does," said Mr Sompop.
HARRIS POSES FEWER RISKS
Amonthep Chawla, chief economist at CIMB Thai Bank, forecasts the Thai economy will face more opportunities and challenges next year if Mr Trump wins.
Mr Amonthep said Mr Trump's economic and trade policies could lead to greater uncertainty for the global, Asean and Thai economies next year compared with a Harris administration.
Specifically, Mr Trump's efforts to diminish China's economic influence may put pressure on trade and investment in the region, he said.
"Thai GDP growth for 2025 is projected to be 2.5% under a Trump presidency, in contrast with 3.2% under a Harris presidency. The intensifying US-China tensions under Mr Trump would adversely affect Thai exports," said Mr Amonthep.
"Should Mr Trump secure the election, Thailand's export growth is expected to reach only 1% next year, compared with 2.6% under Ms Harris."
Domestic demand may also weaken based on falling commodity prices, particularly for rice, rubber and cassava, he said, adversely affecting the agricultural sector, particularly low-income households in rural areas, reducing their purchasing power.
Under a Trump presidency, Southeast Asian nations could attract foreign capital inflows, bolstered by both foreign direct investment and portfolio investments amid heightened US-China tensions, said Mr Amonthep.
With Mr Trump's proposed policy to raise trade tariffs against China to 60%, Thailand may benefit from a shift in manufacturing bases from the mainland, he said.
Mr Amonthep said Thailand is poised to become a manufacturing hub for Chinese investors across various industries, including electric vehicles (EVs), electronics, textiles and machinery.
Ms Harris speaks during a CNN town hall event on Oct 23 in Delaware County, Pennsylvania. photos by REUTERS
FOREIGN POLICY
Adith Chairattananon, honorary secretary-general of the Association of Thai Travel Agents, said the foreign policies of the new US president would influence Thailand's tourism industry.
Mr Trump has vowed to quickly end the Russia-Ukraine war even before returning to the White House early next year if he wins, while Ms Harris has pledged to back Ukraine and Nato.
Mr Adith said if the war ends, it would benefit the aviation and tourism industry worldwide.
He said transport globally would grow based on fewer flight restrictions, particularly if the Israel-Hamas conflict were to end quickly, as Mr Trump has said he wants.
However, with a Trump administration, Mr Adith said tensions between the US and China may escalate as happened during his first term in the White House, while Ms Harris's policy towards China might not be as aggressive as the former president.
Mr Trump's America First policy will also likely trigger higher tax rates for Chinese imports, he said, weakening China's economy, which would hamper Thailand's tourism sector as tourists from the mainland remain an important source market.
Mr Adith said he believes tensions in the South China Sea and Taiwan Strait will not escalate into a new conflict regardless of the new US president. China will continue to carry out military drills off the coast of Taiwan, but these won't develop into an attack, he said.
In terms of US tourist arrivals, Mr Adith said the number of visitors from this market should remain stable and could reach 1 million, which the Tourism Authority of Thailand set as its target.
OPPORTUNITIES AND THREATS
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the US election presents both opportunities and challenges to the Thai economy in terms of trade, investment and environmental commitments.
Thailand's government and business sectors must adjust their strategies accordingly, such as strengthening economic relations with Southeast Asian nations and supporting domestic industry to reduce risks posed by US trade policy, he said.
If Mr Trump returns to the White House, Mr Sanan said he is likely to stop supporting Ukraine militarily, economically and politically.
US ground forces might be withdrawn from Europe, or the US could possibly leave Nato, he said.
In the Middle East, Mr Trump has promised to take a tougher approach aimed at curtailing the conflict.
Regarding Iran, Mr Trump pushed for returning to a policy of putting maximum pressure on the Islamic republic, perhaps to generate a new agreement with Tehran, or to further constrain it, said Mr Sanan.
Many leaders in the Middle East, including those from the Arabian peninsula, might welcome the return of a Trump presidency, but his America First policy did not provide Arab Gulf leaders, especially Riyadh, with protection from Iran's attack on Saudi oil facilities in 2019, he said.
Moreover, Iran's recent missile and drone attacks against Israel led to rising oil prices and shipping delays, which threaten the Thai economy by increasing the rate of inflation and reducing exports.
A policy of higher tariffs against China would hinder Chinese exports to the US, said Mr Sanan, and could spike cheap Chinese products entering Thailand, affecting the income of Thai manufacturers.
If Ms Harris wins the election, a continuation of the functioning transatlantic security relations and open trade policy under President Biden seems likely, he said.
Ms Harris might seek to revive US leadership in global trade, perhaps by joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), giving Thailand another opportunity to consider membership to expand trade opportunities, said Mr Sanan.
Thailand may benefit from investments in Industry 4.0 and technology transfer through an intensified partnership with CPTPP member states, he said.
Given Ms Harris's support for a clean energy economy, this may open opportunities for Thai companies with expertise in solar, wind and biomass for joint investments in the US.
TRADE WAR
If Mr Trump wins the election, countries that export products to the US, including Thailand, may see significant tariffs placed on many products as a result of the trade war with China, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries.
The trade war erupted during the Trump administration, as he placed high tariffs on Chinese products in response to a years-long trade deficit with China.
"Mr Trump announced the US will not easily accept trade deficits with other countries either," said Mr Kriengkrai.
According to the Council on Foreign Relations, a New York-based think tank, Mr Trump wants to "impose a 'universal' tariff on most imports, while matching higher tariffs imposed by other countries".
Thailand had a trade surplus of around $20 billion with the US in 2020. The value later increased by 11%, making Thailand the 12th-largest current account surplus holder with the US this year, said Mr Kriengkrai.
"I believe Thailand may see US tariffs on its exports of 10-20% if Mr Trump is elected president," he said.
However, trade relations may ease if Ms Harris succeeds President Biden, said Mr Kriengkrai, as a Harris administration would only increase tariffs on certain products, such as EVs produced in China.
COSTLIER ENERGY
Regardless of the next US president, global energy prices are likely to increase, driven by geopolitical conflicts in the Middle East, said Praipol Koomsup, an economist at Thammasat University and a former assistant to the energy minister.
Mr Praipol said he believes Israel's attacks on Hezbollah will continue.
According to the Council on Foreign Relations, Mr Trump said he supports efforts to broker a regional peace deal, while Ms Harris called for an immediate cease-fire after Israel struck Hamas in Gaza following the group's attack on Israel on Oct 7, 2023.
"A protracted conflict will affect oil and liquefied natural gas [LNG] supply in the future," he said.
Thailand is a major importer of crude oil and LNG, which is used in power generation.
LNG imports have increased despite price fluctuations as domestic gas supply from the Gulf of Thailand dwindles.
Global crude oil prices are likely to range between $70-80 per barrel, but they could surge to $100 per barrel, said Mr Praipol.
Molpasorn Shoowong, Phusadee Arunmas, Lamonphet Apisitniran and Yuthana Praiwan
