With trade tensions exacerbated by the US's reciprocal tariffs, key business sectors are calling on the Thai government to prioritise negotiations with Washington during the 90-day pause, as the nation is expected to be one of the hardest hit from the tariff rate of 36%, which is significantly higher than the regional and global average.
With exports at risk, analysts and business sectors also warn of far-reaching economic impacts, compounded by China's slowdown and cooling investor sentiment, particularly regarding vulnerable sectors such as tourism.
BROAD-BASED IMPACTS
Chak Reungsinpinya, managing director and head of research at Maybank Securities (Thailand), said several of Thailand's industrial sectors could face significant headwinds due to US President Donald Trump's tariff.
Sectors that could suffer from a potential export slowdown or higher competition from imports include electronics, automotive and petrochemicals, according to the brokerage.
Meanwhile, the banking, finance and commerce sectors could decline if economic growth dips.
Moreover, the tariffs announced could make China+1 trade either permanently or temporarily irrelevant, negatively affecting industrial estates, said Mr Chak.
"With the US tariffs being imposed across the board, we see a risk that other countries, particularly China, will dump their products on the Thai market. This could lead to Thailand increasingly relying on imports, weakening a manufacturing sector that has already experienced a significant downturn before the tariff announcement," he said.
Thailand's imports from China have increased significantly since 2018 when Trump first imposed tariffs on Chinese goods. While some of these goods could have been to serve local demand, Maybank believes a significant portion were bound for export to the US.
"We expect broad-based impacts, not only for export-led sectors, but also for domestic consumption and investment," said Mr Chak.
"Still, we think Thailand can navigate its way out of this chaos if it significantly cuts its trade surplus with the US, paving the way for lower tariffs in the medium term."
Naruedom Mujjalinkool, an analyst with Krungsri Securities, said the 36% tariff rate for Thailand poses a significant economic challenge to the electronics sector, as the US is a major destination for electronic components.
Most companies in this sector generate 20-30% of their revenue from US sales and they could face a significant downturn in earnings if the Thai government "fails to implement solutions to mitigate the impact of US tariffs," he said.
According to Mr Naruedom, Delta Electronics (Thailand) and KCE Electronics face the most significant risk exposure stemming from potential US tariffs.
In the short term, if the tariffs are implemented, he said the majority of these two companies' customers are likely to delay placing new orders during the second quarter, until the direction of the Thai government's negotiations becomes clearer.
"Our view is the operating performance and profits of most companies will likely remain at risk of a continued year-on-year decline from the previous quarter. We are awaiting clarity on how customers will negotiate agreements or arrangements with these companies," said Mr Naruedom.
STRATEGIC ADJUSTMENTS
Poj Aramwattananont, chairman of the Thai Chamber of Commerce, said the US has proposed a list of items for which it would like Thailand to increase its import quantities, including energy products, agricultural goods, food, and military equipment.
"The Thai government needs to carefully assess which of these items to import," he said.
Mr Poj said the US tariff increases are regarded as a serious global challenge that will significantly impact Thailand, changing the global supply chain and distorting both demand and supply worldwide.
For Thailand, the tariffs should catalyse changes among industrial and agricultural entrepreneurs, he said.
"It is essential that we enhance our production processes to cut costs, increase yields, and enhance productivity to keep Thai products competitive. The government should implement supportive measures to facilitate these transitions," said Mr Poj.
He said it is important to establish a "Team Thailand" for negotiations, chaired by the prime minister and engaging representatives from all relevant government agencies and the private sector. This team will evaluate the impacts of the US trade strategy and formulate tactics to address these changes, said Mr Poj.
The team can explore avenues for Thailand to sustain effective trade, particularly as other countries divert goods from the US to Thailand, which could hamper the local manufacturing sector, he said.
Mr Poj said he expects the US tariff hikes will expedite negotiations for the Thailand-EU free trade agreement (FTA), encouraging more bilateral FTA discussions.
Tourism expenditure could be affected if visitors exercise more caution amid the economic downturn. Apichart Jinakul
TOURISM VULNERABLE
Ratchaporn Poolsawadee, vice-president of the Tourism Council of Thailand, said the US tariff policy undeniably hurts this year's economic outlook as well as global tourism.
He said tourists from countries hit by the tariff hike might travel less, even as the policy is paused for 90 days for most nations.
The Thai tourism industry is vulnerable to the tariff policy, as the Chinese market is the largest contributor to this sector, said Mr Ratchaporn.
"Now that China has become a major target of US tariff policies, this could affect Chinese travellers' spending and their decisions to travel abroad, including to Thailand," he said.
"The Chinese market has already been declining due to concerns over the call centre scam since the beginning of the year. With the Trump trade war, it will be difficult to meet the target of 7-8 million Chinese tourists this year."
Domestic tourism is also a concern, as it could suffer if the country's manufacturing and export sectors are damaged by the tariff policy, potentially leading to weak economic growth, said Mr Ratchaporn.
He said the government should focus on diversifying the international tourist market, rather than relying heavily on a single market as in the past. Potential alternative markets include India and the Middle East.
For the long term, tourists may opt for more short-haul destinations rather than long-haul travel to save on costs, said Mr Ratchaporn. Some airlines have already warned of rising airfares, according to news reports.
He said the tourism authority should monitor the outlook to identify markets with growth potential. For instance, Japan is already holding discussions with the US regarding tariffs and may experience less of an economic impact, which could make it a promising market, said Mr Ratchaporn.
He said Thailand should position itself as a "value-for-money" destination, offering unique experiences that can only be found in the country, in order to sustain tourism growth.
As a former president of the Tourism Association of Koh Samui and a business owner in Surat Thani, Mr Ratchaporn said the US tariffs have already affected the rubber industry in the southern provinces, a major industry there along with tourism.
Rubber prices have dropped by more than 9 baht per kilogramme, creating uncertainty for farmers and exporters.
The US tariffs may prompt China to dump their products on the Thai market, increasing the country's reliance on imports and further weakening Thailand's struggling manufacturing sector. Nutthawat Wichieanbut
STATE-LED SOLUTIONS
The government is in a better position to deal with Trump's stiff tariffs than the business sector, which may face some limitations, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI).
He said state agencies have more powerful resources to resolve Thailand's substantial trade surplus with the US.
The FTI suggests the government purchase more military technology and weaponry from the US as it has a high value, helping to ease what Trump has termed an "unfair" trade advantage.
Mr Kriengkrai said the military technology and weaponry are deemed necessary items because they would be used by the Thai military, while it would be more difficult for the business sector to purchase a similar value worth of products from the US.
"Whatever products the business sector would buy, they could not rapidly reduce the trade surplus value because many factors are involved, including costs and competition," he said.
While the government must make its purchasing decisions carefully, some products could be more easily bought by the state sector than the private sector, said Mr Kriengkrai.
The Trump administration announced on April 2 the reciprocal tariffs on trading partners, effective on April 9. Trump later decided to delay the enforcement, noting most countries had not retaliated and were willing to negotiate.
"We were given more time to breathe and adapt," said Mr Kriengkrai.
Proper responses to the tariffs are urgently needed or Thai economic growth will decline, he said.
The Joint Standing Committee on Commerce, Industry and Banking projected GDP growth of 2.4-2.9% this year, but with the 36% tariff, the economy may grow by less than 2%, said Mr Kriengkrai.
He said the decline would mainly stem from the negative impact on Thai exports, which play a key role in driving the country's GDP, in addition to tourism.
On April 12, just days after Trump's announcement, Thai exporters began to notice the impact as their goods could not be unloaded at destination countries, with many customers saying they were unable to deal with the higher tariffs.
"They had to take the goods back to Thailand," said Tanit Sorat, vice-chairman of the Employers' Confederation of Thai Trade and Industry.
If the tariff issue is not addressed, the Thai manufacturing sector and workers will bear a heavy brunt, he said.
"We may see a reduction in employment and an economic slowdown," said Mr Tanit.
"This problem is causing more concern than the 1997 Asian financial crisis and the pandemic."
TRADE BARRIERS
SCB EIC, a research unit under Siam Commercial Bank, urged the Thai government to act swiftly to negotiate with the US, aiming to mitigate the impact.
The research house said the priority areas should be those outlined in a March 2025 report issued by the US Trade Representative (USTR) on foreign trade barriers.
According to the USTR, the US aims to reduce its trade deficit with Thailand by lowering non-tariff barriers and addressing critical concerns such as intellectual property violations and labour rights issues.
"The Thai government should consider the broader national interest and establish mechanisms to manage the impact across affected sectors," noted the EIC.
Thailand is among the nations most affected by the proposed tariffs, with the initial tier at 36%, 20th among the US's 185 trading partners and 10th in Asia. The large tariff is attributed to the US's large trade deficit with Thailand.
The global average for the new US tariffs is 16%, and average for Asia is 21%.
The EIC warned the tariff effect on the Thai economy could be significant, with both direct and indirect impacts on its export sector.
The US is Thailand's largest export market, and rising trade tensions between the US and China may slow China's economy -- another key trading partner for Thailand -- exacerbating the overall effect, said the research unit.
Several major Thai product exports to the US are expected to be marred by the new tariffs, including computers, components and equipment; rubber products; and telephone equipment and parts.
In addition, global competition is expected to intensify as countries scramble to find alternative markets, leading to heightened domestic and international rivalries, noted the EIC.
Investor sentiment may shift to a more cautious wait-and-see approach, potentially delaying foreign direct investment in Thailand, said the unit.
The Bangkok Port dominates the capital's skyline. Trump imposed a stiff tariff on Thai exports to the US based on a lopsided trade imbalance. AFP