Thai exports to be dented slightly by Trump policy

Thai exports to be dented slightly by Trump policy

The protectionist trade policy of the new US president will likely affect Thai exports only slightly in the short term, the research arm of TMB Bank said.

Thai exports most vulnerable to the shift in the US policy are chemicals, electronic parts and textiles while electrical appliances, machinery and medical equipment will likely benefit, TMB Analytics said.

As a result of the change.Thai exports may see a net loss of 16 billion baht, or around 0.2% of the total this year.

After the inauguration on Friday, US President Donald Trump may exercise restricted power to curb trade deficits without Congress approval.

According to the 1974 Trade Act, a president may impose trade barriers for a period up to 150 days to ease deficits. They may be in the form of a duty at rates not more than 15% on imports from the trade partners with which the US had the most deficits. He may also set quotas for imports from such countries.

In any case, he can’t impose an import duty as high as 45% as claimed by Mr Trump during his campaigns, TMB Analytics said.

The US trade deficits stood at $800 billion over the past five years. Those with China were the largest (40%) while Thailand ranked 12th with $15 billion or 2%.

TMB Analytics pointed out the real impact on Thailand was indirect.

“US trade barriers with China may affect Thai products on the supply chain of Chinese exports to the US.

“These are mainly raw materials and intermediary products, primarily chemicals, electronic parts and textiles. Thai exports of these products may fall by 0.6% or 49 billion baht.”

But at the same time, when Chinese products face barriers, Thai exports stand a good chance to replace them, mainly electrical appliances, machinery and medical equipment.

All in all, Thai exports will be slightly down by 0.2%, resulting in a revised export growth forecast to 1.3% from 1.5% this year, it concluded.

 

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