Trade war will test govt
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Trade war will test govt

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Photos:123RF
Photos:123RF

Canada, China, and Mexico yesterday unveiled tariff countermeasures against the US, after US President Donald Trump declared he was putting up tariffs against these countries.

On the day of his inauguration, President Trump signed a fusillade of orders -- among them new tariffs, imposing a 25% levy on imports from Canada and Mexico, and a 10% tariff on Chinese goods. The orders include retaliation clauses, which means the US will increase tariffs further if the countries respond with similar moves.

These latest actions signal the start of a global trade war headlined by protectionist measures. The impact will be felt far and wide by consumers and trading nations, including Thailand.

Thailand, which ranks 12th among countries with trade surpluses with the US, must keep abreast of the latest developments. The Thai economy is already vulnerable to external challenges. With the US being Thailand's largest export market, accounting for 18% of total exports valued at $55 billion in 2024, any disruption in trade relations could have far-reaching consequences.

The US decision to impose tariffs on China presents both challenges and opportunities for Thailand. On the downside, Chinese manufacturers are expected to redirect their excess supply into the Asean market, including Thailand. Rises in Chinese imports could result in market saturation, price dumping and intensified competition that will exacerbate problems among our vulnerable local producers.

As the US steps up probes into Chinese firms which relocate production to circumvent tariffs, Thailand could face additional trade restrictions should American authorities perceive it as a hub for trans-shipped goods. On the plus side, Thailand stands to benefit from the accelerating shift of supply chains out of China. The question is whether Thailand can rise to the occasion.

In Mr Trump's first term, research suggested global firms moved approximately US$300 billion worth of manufacturing out of China, yet Thailand captured less than 10% of that relocation. That said, Thailand faces several structural challenges in comparison with competitors like Vietnam and Indonesia. Rising labour costs, a shortage of skilled workers, and an ageing population only lower Thailand's competitiveness.

While the government is focused on short-term economic measures, such as the 10,000-baht digital wallet handout, trying to open casinos and on-line betting, it is struggling to tackle pressing issues like PM2.5 pollution, air quality, and call centre scams. More concerning is the absence of a clear strategic direction or structural reforms that would restore Thailand's competitive advantage on the global stage.

Industry leaders have called for a "war room" to develop effective strategies and contingency plans. Collaboration between the government and private sector is essential to ensure a coordinated response to external pressures. Structural reforms, particularly in areas such as innovation and legal frameworks, are also critical to fostering long-term resilience.

The government's approach to mitigating the impact of the US tariffs on Thai exports remains unclear and appears to lack urgency.

Now that Washington has acted, and a tariff war is erupting, it is about time the government made a loud and clear statement of intent.

We can only hope the government rolls out an enforceable and wisely crafted response. Anything less than that, and Thailand will find itself at a severe disadvantage.

Editorial

Bangkok Post editorial column

These editorials represent Bangkok Post thoughts about current issues and situations.

Email : anchaleek@bangkokpost.co.th

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