Thai Exporters Eye Growth Despite US Tariff Concerns
Reduced US tariffs on Thai goods offer some relief, but businesses brace for squeezed margins and intensified global competition
- Thai exporters forecast an overall export growth of 5-7% for 2025, aided by a reduction in US tariffs on Thai goods from 36% to 19%.
- Despite the tariff reduction, concerns remain that the remaining 19% rate will diminish exporters' profit margins as they are expected to share the cost with US importers.
- To counter the challenges, the Thai Shippers' Council is urging for measures to reduce business operating costs and to aggressively pursue new export markets.
The Thai National Shippers' Council (TNSC) has indicated that a reduction in US import tariffs on Thai goods, from 36% to 19%, will alleviate some pressure on the nation's export sector.
Despite this positive development, concerns persist regarding rising costs and diminishing profit margins. The TSCC anticipates overall export growth of 5-7% for 2025.
Thanakorn Kasetsuwan, president of the TNSC, confirmed that the outcome of negotiations with the United States regarding the "Reciprocal Tariff" on Thai imports met the private sector's expectations.
He extended his appreciation to the Thai negotiating team for achieving this objective.
The new tariff rate, now closely aligned with those levied on key regional competitors, is expected to maintain the competitiveness of Thai products.
This clarity in tariff rates is projected to have a favourable impact on Thai exports in the latter half of the year, contributing to the forecast 5-7% growth for the entirety of 2025.
However, the 19% tariff rate continues to present several challenges for Thai exports:
Shared Burden on Exporters: US importers are anticipated to negotiate purchase prices with Thai exporters to distribute the tariff burden. This will impose direct costs on Thai exporters and significantly reduce their profit margins.
Downstream Impact on Domestic Producers: Domestic upstream raw material producers in Thailand are expected to experience a knock-on effect. Export-oriented manufacturers will need to negotiate raw material prices to reduce their overall export costs and remain competitive, ultimately affecting the incomes of local businesses and farmers.
Higher Prices for US Consumers: American consumers will face increased product prices. While retail prices may not rise by the full 19% and most consumers may accept some increment, the unavoidable consequence of higher prices will be a reduction in the volume of final goods consumed.
Global Price Competition: Reduced exports to the United States, particularly for consumer goods, could see rival nations diverting their products to other secondary markets, thereby intensifying global price competition.
In response to these challenges, the Thai Shippers Council has proposed that both government and private sectors collaborate to enhance the competitiveness of Thai enterprises.
Their recommendations include:
Reducing Business Operating Costs to ensure Thai product prices remain competitive in the global market. This involves:
- Adjusting financial costs, including exchange rates, to align with regional trends and ensuring loan interest rates reflect the prevailing economic situation.
- Lowering energy costs for the manufacturing and transportation sectors.
- Slowing the rate of increase for labour costs.
Aggressively Pursuing New Markets through free trade negotiations, organising international trade promotion activities, facilitating visits by Thai trade delegations to target markets, and arranging business matching events for various product groups.
Expediting Liquidity Support and Ensuring Adequate Working Capital for businesses venturing into new markets.
Strictly Regulating Imported Product Standards to alleviate pressure on domestic producers, among other measures.
