Trading places: Thai export boom hides ticking trade bomb
Amidst the cheers of soaring export numbers, the Thai National Shippers’ Council (TNSC) fired a warning shot, urging Thailand to shift its focus towards resolving trade imbalances on a country-by-country basis.
TNSC chairman Chaichan Charoensuk warned that the ongoing trade war resembles a ticking time bomb for exporters, with an explosion expected in the second quarter.
The council predicts a humble shipment growth of 1-3% this year, aiming for a total of US$305 billion, nudging up slightly from US$301 billion in 2024. However, dark clouds loom on the horizon, with uncertainties like US President Donald Trump’s feared import tariffs casting a shadow over Thai exports.
Despite new US tariffs hammering imports from Canada, Mexico, and China, predictions for the first quarter see exports climbing by 7-8%, with an average monthly total of US$25 billion. A surge in exports has swept through as businesses brace for a potential escalation in the trade war.
Charoensuk observed that the second quarter will be crunch time, as the effects of Trump’s tariffs become stark. With steel and aluminium essential to producing everything from electronics to automobiles, the ripples could hit Thailand hard both directly and indirectly.
His concerns extended to the broader impact of the tariffs, predicting that countries like Canada and Mexico, facing higher US tariffs, might shift exports elsewhere, triggering supply chain chaos and possibly sparking a commodity price war, reported Bangkok Post.
While Thailand enjoys a US$35 billion trade surplus with the US, a hefty US$45 billion trade deficit with China tells another tale, tilting the scales unfavourably. Charoensuk stressed the need for Thailand to spotlight specific trade balances rather than rest on positive figures alone, pointing to deeper structural snags in the export realm.
Challenges abound for the Land of Smiles, with foreign direct investment promising trade balance improvement, yet offering scant local content. Looming US tax measures on Thai exports could spell further trouble, rattling businesses through the supply chain.
The redirecting of surplus Chinese goods to Southeast Asia due to tariffs has cranked up competition, potentially squeezing small businesses and deepening Thailand’s trade deficit with China. Hurdles including limited access to soft loans, outdated factories, a dearth of tech-savvy workers, insufficient R&D investment, and lack of a unified industrial vision all throw spanners in the growth works.
To navigate these choppy waters, the council implores exporters to tread new markets, forge bonds with importers and trade envoys, exploit existing economic ties, and milk free trade agreements for all they’re worth.
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