After the US announced on April 9 it would temporarily suspend tariff hikes on several countries for 90 days, the global trade sector breathed a sigh of relief.
Yet trade tensions remain elevated even after China reached an interim agreement with the US on May 12 to pause tariffs for a period of 90 days for further negotiations to take place.
Negotiations with other countries have progressed, as the UK recently concluded a vague trade deal with the US, while Japan completed two rounds of negotiations. However, on Friday US President Donald Trump said the country will not negotiate on tariffs with most nations, instead sending letters to them detailing tariff rates.
Thailand has registered slower progress, sparking concerns in the business community as the timeline regarding its tariff suspension is elapsing.
With China set to benefit from the 90-day pause, Thailand may find itself at a competitive disadvantage if its negotiations are not concluded promptly.
POTENTIAL EFFECTS
Dhanakorn Kasetrsuwan, chairman of the Thai National Shippers' Council (TNSC), said the US-China agreement to pause their reciprocal tariffs for 90 days has created an advantageous window for China that's about a month longer than many other countries.
"This period allows China to ramp up exports of essential products, become more competitive on pricing, and seize market share in areas where Thailand is also active, including electrical appliances, machinery, and processed agricultural goods destined for the US market," said Mr Dhanakorn.
The TNSC urged the government to swiftly negotiate with the US to maintain tariff benefits and collaborate with the private sector to initiate strategies to counteract potential challenges.
Temporary price adjustments in key markets should also be considered, he said.
While analysts assess China's negotiations as being difficult, Mr Dhanakorn said Beijing may leverage this period to secure a special deal extending the tariff pause, gaining advantages for particular products, or establishing government-to-government agreements.
He said Thailand could be affected in two ways.
On the negative side, China might quickly enter markets with lower prices, especially Cambodia, Laos, Myanmar and Vietnam, along with the Middle East and Africa -- areas Thailand is focusing on.
On the positive side, if any agreements help ease trade tensions, Thailand could experience indirect benefits through lower shipping costs and a strengthened supply chain, although these advantages may be limited, said Mr Dhanakorn.
Thailand must monitor the trade stances of China and the US because their decisions can significantly influence the global market, he said.
The government should also introduce measures to help stabilise Thai businesses, said Mr Dhanakorn.
Moreover, the role of commercial diplomats should be strengthened to ensure detailed information is available to the private sector, allowing for quick adaptations to any shifts in the situation, he said.
STAYING VIGILANT
The US-China agreement to pause tariffs should not be considered a signal their trade conflict will stop, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI).
"We have to look ahead to what will happen after that 90-day period. We cannot be complacent," he said.
The world's two largest economies have competed with each other for years, taking turns adjusting tariffs on each other's imports. The conflict is unlikely to be easily resolved, meaning Thailand should brace for potentially unpleasant impacts to its economy, said Mr Kriengkrai.
The global economy continues to be uncertain, with manufacturers in many countries affected by the US's reciprocal tariff policy.
"It is difficult to anticipate how much the US-China trade war will intensify, but it has continued to gain momentum," he said.
The FTI warned the government about an influx of goods from China and other countries into Asia, including Thailand, following the announcement of the US reciprocal tariffs on many countries.
The 90-day pause provides an opportunity for the Thai government to push for new measures to better protect local industries, said Mr Kriengkrai.
The Joint Standing Committee on Commerce, Industry and Banking earlier called on the government to enforce legal measures against the influx of low-cost Chinese products into the Thai market, which is expected to intensify this year.
Current measures are inadequate to protect manufacturers in the country, the committee said.
Among the efforts already implemented by the government are the Customs Department's imposition of the 7% value-added tax on imports valued less than 1,500 baht, seeking to decelerate their sales, and the Thai Industrial Standard Institute's more frequent inspections of products listed on online platforms.
Local manufacturers are not only concerned about the impact of harsh US tariffs on Thai exports, but also reduced sales if the country is flooded with Chinese imports, according to the FTI.
Chinese goods are 20-40% less expensive than Thai goods, said ML Peekthong Thongyai, vice-chairman of the FTI, referring to an FTI poll.
Roughly 45% of 540 executives and members of the FTI said this price gap was noticeable when Thai and Chinese products were compared, while 21.1% said Chinese imports were only 10-20% cheaper.
Chinese entrepreneurs have the advantage of lower costs and better technology, said ML Peekthong.
"Thai entrepreneurs already reduced costs and enhanced production efficiency, but they are still unable to compete with Chinese rivals," said Mr Kriengkrai.
MORE FTA NEGOTIATIONS
Poj Aramwattananont, chairman of the Thai Chamber of Commerce, said the recent trade discussions between the US and China offer promise for constructive negotiations that could benefit other nations.
He said the Thai government should pursue negotiations with the US, and the chamber submitted a proposal to the administration it considers to be appropriate and advantageous. However, Mr Poj said any proposal concerning tariff reductions must safeguard Thailand's agricultural sector.
He said several major Thai companies, including Banpu Plc and Thai Union Plc, are eager to explore investment opportunities in the US.
Mr Dhanakorn of the TNSC agreed the US-China trade dialogue is a positive development.
He said he anticipates reduced trade tensions in the short term, as both countries are motivated by the desire to maintain economic stability and ease global tensions. Yet Mr Dhanakorn said the conditions governing these negotiations must be monitored.
In the meantime, he said Thailand should broaden its export markets, especially in Southeast Asia, the Middle East and India, to reduce dependence on primary markets.
Furthermore, the country must work on enhancing its competitiveness by adopting technology for production, implementing environmental, social and governance practices, and elevating product standards to international levels, said Mr Dhanakorn.
"We must initiate free trade agreement [FTA] negotiations or bolster trade collaborations with promising trading partners to ensure sustained economic growth," he said.
The TNSC supports negotiations for an Asean-US FTA, said Mr Dhanakorn. While Asean has an FTA with China, it lacks a similar agreement with other significant consumer markets such as the US.
ALLOWING TOURISM TO BREATHE
Thienprasit Chaiyapatranun, president of the Thai Hotels Association, said the 90-day tariff pause between the US and China offers short-term relief for the global market and the tourism industry.
He said the pause may signal greater opportunities for all countries to negotiate trade deals to benefit their economies.
While the pause is temporary, Mr Thienprasit said it offers optimism to prospective travellers planning overseas trips this year, including the Chinese market, as well as foreign visitors from both leisure and business segments.
As a consequence, Thailand's stagnant inbound market can expect some uplift, he said.
Since Trump's initial announcement of the tariff hikes in April, some people have delayed their travel plans, concerned about the economic impact and awaiting clearer developments in the trade war, said Mr Thienprasit.
Although most business and meeting events have continued as scheduled, there were fewer foreign attendees than expected due to tighter budgets for overseas trips by companies wary of economic uncertainty, he said.
Mr Thienprasit suggested during this period, Thailand should continue to promote itself as a welcoming tourism destination, with attractive sites and events, while also focusing on restoring safety, the country's image and tourist confidence.
DE-ESCALATION
Fitch Ratings said the joint statement on the US-China economic and trade meeting held in Geneva appears to be a significant de-escalation of the trade war. However, uncertainty over where tariff rates will settle and the impact of those already implemented continue to be key concerns.
The statement suspended for 90 days the 34% reciprocal rate the US imposed on Chinese imports on April 2, and cancelled the subsequent escalation of the reciprocal rate to 125% announced on April 8-9.
This lowers headline US tariffs imposed this year on Chinese imports to 30% (comprising a reciprocal rate of 10% and a fentanyl-related tariff of 20%), while Chinese duties on US imports are 10%.
The duo plan to establish a mechanism to continue discussions about economic and trade relations.
"The announcement suggests a willingness to avoid a sustained collapse of US-China trade flows that would severely disrupt the world's two largest economies," noted Tris Rating.
"Lowering the 34% reciprocal tariff rate to 10% echoes the US's approach taken for many trade partners in Trump's April 9 executive order. It also undoes the sharp escalation that raised US-China bilateral tariff rates to triple digits.
"The Trump administration appears to be using tariffs to pursue an import substitution agenda aimed at boosting US manufacturing and reducing the trade deficit, making further disruption to trade flows and supply chains likely."
A surge in imports in anticipation of higher tariffs contributed to a 0.3% annualised contraction in US GDP in the first quarter.
In Tris's view, trade and related data are likely to remain volatile in the coming quarters as these effects play out.
"Uncertainty over the outcome of US-China talks and other bilateral trade negotiations will continue to act as a brake on investment in multiple sectors and jurisdictions," Tris noted.
US trade policy has been highly volatile in recent months, but if the latest de-escalation holds, there would be upside potential relative to Tris's global growth forecasts, said the ratings agency.
Stalls sell fashion accessories last week at a wholesale market in China's Zhejiang province. China and the US recently reached an agreement to pause tariff hikes for 90 days. Bloomberg