February 13, 2025
BANGKOK – The world is closely watching the impact of President Donald Trump’s tariff hike measures, which will affect US trading partners, particularly countries with high trade surpluses. These, analysts say, run the risk of retaliatory tariffs and potential economic fallout, and should thus focus on fast-tracking trade negotiations
Economists predict that Trump’s trade war will bring significant changes across Asia, with India and Thailand facing high risks of severe economic repercussions due to likely retaliatory tariff policies.
Analysts note that emerging Asian economies impose above-average tariffs on US exports, making them more vulnerable to higher retaliatory tariffs. As a result, these countries are expected to accelerate trade negotiations with Trump.
During his first term, Trump pushed for the US Reciprocal Trade Act, which would grant him the authority to impose tariffs on any trading partner, setting rates individually for each product category.
From his election campaign last year to the present, Trump has remained firm on his stance, promising to impose tariffs at equivalent rates.
Trade imbalances under scrutiny
Both India and Thailand impose higher tariffs on US goods compared to the tariffs the US imposes on imports from these two countries. However, Trump has not yet disclosed specific details.
Analysts highlight a significant tariff disparity between India and the US, with India’s average tariff on US imports exceeding the US tariff on Indian goods by more than 10%.
There are concerns that India and Thailand could face additional 4-6% import tariffs if the US moves to narrow this tariff gap. India still has room to increase imports from the US, particularly in defence equipment, energy and aircraft. The extent of the impact will depend on the specifics of Trump’s trade policy decisions.
This trade threat is pressuring Asian nations to be more accommodating to Trump while also accelerating efforts to strengthen export-driven economies in the face of rising trade tensions.
A leading Indian LNG importer is currently in talks to purchase more gas from the US, while Thailand is also considering increasing its imports beyond its planned purchases of ethane and agricultural products this year.
Private sector supports government action
Visit Limlurcha, vice chairman of the Thai Chamber of Commerce, noted that the US may base its tariff decisions on both trade balances and existing tariff disparities with its trading partners. Therefore, Thailand must prepare for negotiations, especially by proposing measures to address the US trade deficit.
The Thai government has outlined two key product categories for potential increased imports from the US: agricultural products, such as soybeans and animal feed corn, which Thailand already imports and may slightly increase, and industrial products, such as ethane, which is used as a feedstock for Thailand’s petrochemical industry. Additionally, Thailand may negotiate to highlight that some US imports from Thailand originate from US companies operating in Thailand, such as electronic components used for value-added production in the US.
“The private sector fully supports the government’s task force to engage in trade negotiations with the US. We are ready to collaborate and provide necessary trade data to support these discussions,” Visit stated.
Jirayu Huangsap, spokesperson for the Prime Minister’s Office, revealed that during the Cabinet meeting on Tuesday(February 11), that Prime Minister Paetongtarn Shinawatra gave instructions to study the impact of trade measures with the US, which could negatively affect the export of Thai agricultural products, as well as other items like electronics.
The government appointed a working group on US trade policy on January 6 to study and plan responses to Thailand’s trade relations with the US, ensuring a clear direction that maximises the benefits for the country’s trade and investment. The group is chaired by the Commerce Ministry’s Permanent Secretary and includes relevant agencies such as the Board of Investment (BOI), and the Agriculture and Cooperatives, Foreign Affairs and Commerce ministries.
The working group, along with the Ministry of Agriculture and Cooperatives and the Ministry of Defense, has been instructed to quickly review the pros and cons of the situation and draft measures to prepare for trade negotiations and investment strategies. These will be presented to the Cabinet at the next meeting.