Thailand is currently facing a new economic challenge stemming from the escalating 2nd round of trade wars, which has prompted both government and private sectors to implement Reciprocal Tariff measures. Following the announcement by U.S. President Donald Trump on April 2, 2025, to impose new tariffs, Thailand is bracing for potential increases in import tariffs by as much as 36% if negotiations with the U.S. do not yield results by July 7, 2025, the deadline for the tariff implementation grace period.
This latest round of trade wars is perceived to be more impactful than the previous one during Trump's first term from 2017 to 2021. The Thai government is under pressure to ensure that if the U.S. imposes higher import tariffs, Thailand should respond with increased tariffs as well, as suggested by Krongthongphanit, a representative from the Thai National Shippers' Council.
In response to these challenges, the Thai government has been proactive in easing trade barriers and providing support to businesses, particularly small and medium-sized enterprises (SMEs), to help them export to foreign markets. The Ministry of Commerce is collaborating with other agencies, including the Ministry of Foreign Affairs, to review existing trade agreements with the aim of improving the country's trade and investment environment.
"Thailand is signaling increased momentum from Chinese import tariffs, which is causing price increases in the Thai market," stated a Secretary from the Ministry of Commerce on December 1, 2024. This situation has led to unfair competition, especially among MSMEs in the supply chain of goods destined for export.
Moreover, the trade measures are rooted in economic logic and geopolitical factors that have heightened foreign investment in Thailand. However, there are concerns that increased imports to Thailand could destabilize the domestic market and affect new investment projects. The Ministry of Commerce has prepared to deal with the situation, emphasizing the importance of monitoring trade tensions with the U.S. and potential retaliatory measures from other countries, particularly China.
As the Thai economy grapples with these pressures, the Ministry of Finance is closely tracking changes in U.S. tax policies and their ramifications on the economy. The ministry has outlined a series of measures to mitigate the impact of these trade wars, including ongoing negotiations with the U.S. to find mutually beneficial solutions.
Despite these challenges, analysts predict that the Thai stock market will fluctuate today, May 7, 2025, in line with other Asian markets. The market is expected to respond positively to trade negotiations between the U.S. and China, which are set to take place in Switzerland this week. This has created a favorable atmosphere for risk assets, with the Thai stock market anticipated to rise, supported by buying interest in large-cap stocks.
Mr. Weerawat Virojpochana, Director of Securities Analysis at Finansia Syrus Securities, noted that the Thai stock market is likely to fluctuate upwards today, buoyed by positive signals from U.S.-China trade talks. The market is projected to face resistance around 1,200 points and support at 1,180 points.
Furthermore, foreign investors have shown interest in the Thai ESGX fund, which is adding momentum to the market. However, the Dow Jones Industrial Average closed down by 389.83 points or -0.95% on June 6, 2025, reflecting some selling pressure in the U.S. markets.
In the Asian markets, the Nikkei in Japan opened at 36,903.66 points, up by 72.97 points or +0.20%, while the Shanghai Composite in China opened at 3,354.97 points, up by 38.86 points or +1.17%. The Hang Seng index in Hong Kong also increased by 507.12 points or +2.24%.
As the Thai economy faces these pressures, the government is taking steps to address the situation. The Ministry of Finance has been tasked with preparing measures to stimulate the economy, including the allocation of funds for economic stimulus through fiscal policies that are proportionate to the current situation.
In addition, the government is accelerating budget disbursement for the remainder of 2025 to support economic stimulus efforts. The Ministry of Commerce is also working to enhance cooperation with various agencies to assist vulnerable groups and small businesses affected by the current economic climate.
Despite these proactive measures, analysts have cautioned that the Thai economy is still facing significant risks, both internally and externally. The tightening credit market is contributing to the domestic economic downturn, and external factors are beginning to pose risks.
"The recovery of the SET is nearing its end, and we recommend increasing the defensive nature of investment portfolios," said an analyst from Principal Asset Management. This sentiment reflects the ongoing challenges faced by the Thai economy, including the effects of U.S. tax policies on exports and the potential slowdown in the tourism sector.
As the government continues to navigate these turbulent waters, it is clear that the economic landscape is evolving rapidly. The situation calls for vigilance and adaptability as Thailand seeks to mitigate the impacts of the trade wars and position itself favorably in the global market.
