US tariffs seen as opportunity for Thailand: Thai MP

Chaiwat spoke exclusively to Tuoi Tre News about how U.S. tariffs could impact Thailand’s economy in particular and ASEAN’s in general.

The People’s Party currently holds the largest number of seats in the Thai House of Representatives.

Short- and long-term impact

The Thai MP noted that the slow and delayed pace of Thailand’s tariff negotiations has made a lot of impact on market sentiment.

President Donald Trump’s letter dated July 7, which stated that Thailand would face a 36-percent tariff if negotiations were not finalized by August 1, came just one day after Bangkok submitted its revised second round trade proposal.

According to the proposal, Thailand pledged to reduce its trade deficit with the U.S. by 70 percent by 2030 and target full balance by 2032.

In exchange, Bangkok hopes to secure tariff rates the same as other regional countries, including Vietnam.

While the final outcome remains uncertain, Chaiwat insisted that prospects are very hopeful.

He also stressed that the U.S. accounts for 20 percent of Thailand’s export volume. Therefore, even if Thailand secures the expected tariff rate, the new duties will still have significant short- and long-term impacts on the economy.

In the short term, Thai exports are likely to face a shock, particularly in key sectors such as electronics, automotives, and food processing.

Many economists predict that if the 36-percent tariff rate remains unchanged, Thailand’s GDP growth could be slowed down to about 1-1.2 percent. The risk of recession is also high if tariffs are kept at a high level.

In the long term, U.S. tariffs could deteriorate the trade competitiveness of Thailand, especially in agricultural and manufacturing sectors. These developments would directly affect the labor market and income of the people, which might lead to higher unemployment rates.

He emphasized that the private sector alone cannot absorb the full impact of these challenges and called for strong government support.

“We have to identify the most vulnerable groups and what kind of support the government can provide, especially to small and medium-sized enterprises," Chaiwat stressed.

“I think the government needs to implement long-term subsidies, which are designed specifically for each vulnerable group rather than general short-term subsidies like the soft loans they are mentioning now. 

"That alone would not be enough."

Global trade’s new normal

Chaiwat also cautioned that Thailand and Vietnam should not view the Trump-era tariffs as a 'four-year issue' that would disappear once a new U.S. president takes office.

“I don’t think the globalization era is over. I think it’s going to be reshaped, from globalization to more fragmented globalization,” he said.

He noted that under former President Joe Biden, most of the Trump 1.0 tariffs remained intact. 

If further tariffs are introduced under Trump 2.0, he expects many will be more or less retained for some time.

“Obviously, we cannot take this as just a four-year thing. This is going to be a new normal. That means Thailand, Vietnam, and other ASEAN developing economies need to adapt themselves to align with the current uncertainties in U.S. trade policy," he added.

One of the strategies he proposed for ASEAN is to 'trade smarter,' which is to balance relationships to avoid overdependence on any single geopolitical bloc, whether the U.S. for exports or China for imports.

“We need to look elsewhere and trade more with the middle-sized countries,” Chaiwat suggested.

Notably, the Thai politician believes that the tariff situation could also serve as an opportunity to enhance competitiveness in Thailand’s domestic market.

“There are some non-tariff barriers that the U.S. mentioned. For example, high barriers in specific service sectors like telecom or financial services, where Thailand needs more competition," Chaiwat said.

"After the merger of two giant telecom operators DTAC and True, we now only have two operators at the moment. 

"It would be good for Thai people to have more competition in this area."

According to the MP, Thailand can also open markets to U.S. goods that the domestic market cannot provide, for example, high-tech goods or some agricultural products like wine.