Prime Minister Paetongtarn Shinawatra has instructed the Thai Cabinet to prepare for potential impacts from tariff increases proposed by the Trump administration.

This follows four months of preparation by a government task force formed on Jan. 6. The task force has been researching and developing strategies, providing regular updates to the Prime Minister.

Paetongtarn emphasized the need to engage with the US to safeguard Thailand’s interests. Relevant ministries have been told to adapt quickly.

A committee meeting is scheduled to discuss strategies with agency representatives.

🔗 Source: The Nation

🧠 Food for thought

1️⃣ Thailand’s measured response draws from past US-China trade conflict lessons

Thailand’s early preparation for Trump’s tariffs mirrors strategies developed during the 2018-2019 US-China trade war, when the country faced both challenges and opportunities.

During that period, Thailand experienced mixed impacts across sectors, with motor vehicles and machinery seeing marginal benefits while chemicals and rubber products faced negative effects of 0.005% and 0.003% of GDP respectively 1.

The government has drawn from this experience by establishing a working team on January 6, 2025, weeks before Trump’s inauguration, demonstrating an institutional memory for handling trade disruptions.

Previous trade conflicts showed that Thailand could partially benefit as manufacturers sought alternative supply chains, with a 2018 survey indicating 18.5% of US firms in China were considering relocating to ASEAN countries including Thailand 1.

This historical context explains why Prime Minister Paetongtarn’s approach emphasizes both preparation and negotiation rather than alarm, reflecting Thailand’s experience that trade conflicts produce mixed rather than uniformly negative outcomes.

2️⃣ Economic projections reveal significant but sector-specific impacts

Current economic projections for Thailand are significantly more severe than during previous trade conflicts, with estimated losses ranging from 359 billion baht (University of Thai Chamber of Commerce) to 880 billion baht (Commerce Ministry) 23.

These projections translate to a potential GDP reduction of nearly 2%, threatening to push Thailand’s annual growth below 2% for the year 4.

The 37% reciprocal tariff announced by the US would disproportionately impact high-value exports including electronics, automotive parts, steel, aluminum, and agricultural products 23.