The ongoing trade tensions between the United States and China are opening up new avenues for Thailand's agricultural exports, according to a recent analysis by the Thai Ministry of Commerce. As the U.S. imposes tariffs on Chinese imports, Thai agricultural products are poised to fill the gap left by Chinese goods, particularly in the U.S. market.
In a detailed report, the Ministry of Commerce's Department of Trade Policy and Strategy (DTPS) highlighted the potential for Thai agricultural exports to increase significantly. With a total export value of approximately $4.76 billion in 2024, Thailand's agricultural sector is strategically positioned to benefit from the shifting dynamics in international trade.
Among the top ten agricultural exports from Thailand to the U.S. are prepared or preserved meats, rice, and fruit juices. Notably, Thailand is the leading supplier of dog and cat food, accounting for 38% of the U.S. imports in this category, valued at $845.2 million. Similarly, Thailand holds a 56% share in the U.S. rice market, with imports valued at $843 million. These figures indicate a strong foothold in critical agricultural sectors that could see further growth as trade barriers against China increase.
The Thai government has identified three main categories of products that could either benefit from the trade war or require careful monitoring. The first category includes products where Thailand already has a significant market share, such as prepared foods, rice, and mackerel. The second category consists of products that China dominates but where Thailand could increase its market presence with improved production and marketing strategies. This includes pasta and frozen squid, where Thailand currently holds smaller shares.
However, the third category raises concerns for Thai exporters. Products such as garlic and dried chili peppers, which Thailand also produces, may face increased competition as Chinese goods flood the market due to the ongoing trade tensions. In 2024, Thailand imported $23.1 million worth of garlic, primarily from China, reflecting a net import status despite local production.
Furthermore, the Ministry of Commerce is closely monitoring the situation to ensure that Thai products maintain their competitiveness in the U.S. market. With the potential for a 36% reciprocal tariff on Thai goods, the government is taking proactive steps to safeguard local industries and prevent any loss of market share.
"We are aware of the challenges posed by the trade war and are implementing measures to protect our agricultural exports," said Phunpong Nainapakul, Director of the Department of Trade Policy and Strategy. He emphasized the importance of adapting to the changing landscape and ensuring that Thai products remain competitive.
In tandem with these efforts, the Thai government is also focusing on enhancing the quality and standards of agricultural products to meet U.S. regulations. This includes stricter monitoring of imports and ensuring compliance with quality standards to avoid any potential trade barriers.
Meanwhile, the trade war has also prompted China to take measures to support its economy and exports. The National Development and Reform Commission (NDRC) of China announced plans to stabilize its economy and employment amidst the ongoing tensions with the U.S. Deputy Director Jao Chenxin stated that the government is committed to achieving a 5% economic growth target for 2025, despite the challenges posed by high tariffs.
China's response includes policies aimed at supporting exporters, such as providing loans and reducing trade costs. The People's Bank of China (PBOC) is also adjusting its monetary policy to assist companies affected by U.S. tariffs, indicating a comprehensive approach to mitigating the impact of the trade war on its economy.
In a related development, Indian exporters are finding new opportunities as Chinese companies seek to bypass U.S. tariffs by collaborating with Indian partners. Reports indicate that during the ongoing Canton Fair, many Chinese firms are approaching Indian exporters to facilitate shipments to the U.S., capitalizing on India's lower tariffs compared to those imposed on Chinese goods.
Ajay Sahai, Director-General of the Federation of Indian Export Organizations, noted that this collaboration could significantly boost the Indian economy while raising concerns among ASEAN countries about increased competition.
As the trade war continues to evolve, both Thailand and India are navigating the complexities of international trade dynamics. The Thai government is committed to enhancing its agricultural export capabilities while ensuring that local industries are protected from unfair competition.
In conclusion, the ongoing U.S.-China trade tensions present both challenges and opportunities for Thai agricultural exports. With strategic planning and government support, Thailand aims to strengthen its position in the global market and capitalize on the shifting trade landscape.
