Cargo vessels at a commercial port. Mr Ekniti says the 15% tariff is expected to boost exports, particularly in the short term during the 150-day period in which the measure remains in effect.
The latest US tariff measures, which impose a uniform 15% import tariff on goods worldwide, is seen as a positive signal for the Thai economy and is expected to help push Thailand’s GDP growth above 2%, says caretaker finance minister Ekniti Nitithanprapas.
However, he cautioned that Thailand’s economy still faces risks from volatility in global trade and investment, as well as from armed conflicts in various parts of the world.
Mr Ekniti added that a ruling by the US Supreme Court on the reciprocal tariff measures late last week, which resulted in the adjustment to the US import tariffs to a uniform level of 15% for all countries on Sunday, has become a key positive factor, helping to improve market sentiment and the overall outlook for the Thai economy.
“The new tariff rate is expected to enhance competitiveness and create a level playing field. Previously, Thai products faced import tariffs as high as 19%, while competing countries such as Singapore were subject to tariffs of only 10%,” said Mr Ekniti.
“The reduction to a uniform rate of 15% therefore represents a ‘comparative advantage’ for Thailand, as the previous tariff disadvantage has been eliminated and a common standard now applies to all countries.”
According to Mr Ekniti, the 15% tariff is also expected to boost exports, particularly in the short term during the 150-day period when the measure is in effect. Exports are projected to accelerate noticeably, especially in the first and second quarters.
Thailand must then seize this opportunity created by the lower tariff rate, which would be an important supporting factor in helping the country’s GDP reach its targeted growth, he said, adding that the measure is expected to help attract foreign direct investment and encourage the relocation of production bases.
“Changes in global trade patterns have led to a growing trend of manufacturers shifting production to Thailand and Southeast Asia. This is reflected in applications for investment promotion submitted to the Board of Investment, which rose by as much as 68% last year,” he said.
“The government then designated this year as the ‘year of investment’ and plans to roll out the BoI Fast Pass strategy to remove legal and regulatory bottlenecks and accelerate the inflow of actual investment into the economy.”
He also said that the new tariff measures have helped to strengthen confidence in the capital market, noting that they not only benefit the export sector but also improve investor confidence in the stock market, with the index responding positively and moving towards the 1,500-point level, a signal of recovery and growing confidence in Thailand’s economic fundamentals.
Nevertheless, while the measures are positive in the short term, the government continues to emphasise the importance of ongoing trade negotiations and the accelerated conclusion of free trade agreements to build long-term advantages and prepare for future uncertainties in global trade.
Danucha Pichayanan, secretary-general of the National Economic and Social Development Council, said the 15% import tariff applied to all countries places every nation on the same level playing field.
He said that, as a result, exports to the American market will depend primarily on each country’s own competitiveness levels.
However, he warned that the US still has other trade-restrictive instruments, including the ability to raise import tariffs on specific products. Thailand, therefore, needs to closely monitor developments in US trade policy, he said.
Suchot Tirawannarat, head of research at KGI Securities (Thailand), said the current situation revived concerns over the US tariffs benefiting China, which previously faced high US import duties. China is Thailand’s key trading partner.
“Once the Chinese economy realises the benefits of lower US duties, the Thai economy would then realise a windfall,” he said.
Nonetheless, he warned that the US still has other measures to increase the import duty to as much as 50%.
In the short term, there may be industries restocking to avoid the impact of the higher US tariff.
“We see the possibility that exports might see an increase until the end of the second quarter to early third quarter as manufacturers globally once again boost their stockpiles ahead of any more introductions of US tariffs,” Mr Suchot added.