Trump’s global trade shake-up forces Thailand to pick a side as 2025 growth is cut to 1.5%. With harsh US tariffs, crackdowns on Chinese-linked exports, and rising pressure from both powers, Thailand’s long-held balancing act may be nearing its end or at least it may become more painful to prolong it in this emerging new era.
The see-saw in stock markets this week at the same time saw a ratcheting up of an all-out trade war between China and the United States. Thailand’s economic future, both short-term and long-term, hinges on this. This week a major bank downgraded the 2025 GDP growth projection to 1.5%. At the same time, matters could be worse, as Trump is said to have hinted Thursday that he expects concessions from the 75 countries including Thailand he is negotiating with. Even more significantly is Thailand’s evolving relationship with China.
In particular, what has been discovered about China in recent weeks—from the scandals over the collapse of the Chatuchak building to what one senior bank economist this week terms ‘Zero Dollar’ Thai exports. In short, Trump’s new economic world or economic reality will make Thailand’s posture of sitting on the fence between China and the United States extremely uncomfortable, if not impossible, going forward.
One of Thailand’s leading banks and economic think tanks has pared back projected economic growth in 2025 to 1.5%. At length, the Economic Intelligence Centre (EIC) of Siam Commercial Bank made the projections on Friday.
At length, the bank cites the disruption to world trade caused by US trade policies. In particular, a now massive 145% tariff on China was confirmed by the White House. Indeed, the analysts at the bank suggest that uncertainty created by President Trump’s approach to policy may also impede private-sector investment decisions in Thailand.
Thailand must prepare as Trump’s 90-day tariff pause may be lifted at any moment without warning
Although the United States has granted a 90-day reprieve on the enforcement of these sweeping retaliatory tariffs, Trump has warned that this suspension could be cancelled unilaterally if trade partners do not reach agreements deemed favourable by Washington. President Trump told reporters that the tariffs would return as scheduled should progress not be made. Certainly, this emphasises the transitory nature of the current pause. There is no time for complacency.
For instance, at a cabinet meeting with his senior team on Thursday, Trump explained further. He said that a 90-day pause granted early Thursday morning Bangkok time, or lunchtime on Wednesday, could be itself suspended at the stroke of a pen.
On Thursday, Trump’s Treasury Secretary Scott Bessent spelt it out. Trump has now created leverage over 75 countries, including Thailand, whom he wants to negotiate with. Certainly, in Thailand, the mood is one of playing ball.
The United States’ new tariff regime includes universal import duties of 10% on nearly all countries and product lines. In short, it is designed to coerce trade partners into reducing their surpluses and opening their markets.
Thailand classified as a high-priority trade target under Trump’s sweeping new universal tariff plan
Thailand, among those most heavily impacted with a 36% effective tariff rate, has been categorised by Washington as a high-priority target. The country is now ranked 20th globally and 10th in Asia in terms of US-imposed tariff burdens.
Deputy Prime Minister Pichai Chunhavajira is preparing to travel to Washington DC in the next few weeks. He will certainly bring with him a package of concessions. However, pushback against these had already begun. Indeed, his situation is fast taking on the geopolitical fault lines of the struggle between Thailand and China.
Certainly, this is true and can only be so. The United States and its mercurial President are attempting something big and spectacular. At the same time, it is also something extremely dangerous.
In short, he is trying to reverse the global trade influence of China that expanded from 2000 to 2024. At the same time, he is attempting to decouple from China. Indeed, what we are witnessing is the occupant of the White House aspiring to a US-dominated global economy.
Trump’s bid to reshape global trade order will test Thailand’s alliances and domestic economic plans
Certainly, that will be resisted not only by China but also by the European Union. In addition, it will be resisted by United Nations agencies and even from within the World Bank and International Monetary Fund (IMF).
In brief, it is the end of global economics and vast supply chains. Therefore, we may see a return to higher costs, slower growth and smaller supply chains. Certainly, for Thailand the decision is critical.
The see-sawing global economy sees Thailand suddenly realising the extent to which Chinese firms and grey capital are damaging the Thai economy.
Indeed, a recent survey by the Federation of Thai Industries (FTI) found that over 70% of Thai executives were deeply concerned by an increasing wave of cheap Chinese imports. Over 90% believed Chinese manufacturers could undercut Thai firms on price, leading to closures and underused production capacity.
Thai concessions to Washington may include crackdown on trade practices benefiting Chinese firms
For instance, one of the key concessions that will be offered to US trade negotiators over the coming weeks is a crackdown on re-exporting Chinese products by Thailand. This week, one senior economist at a leading Thai bank compared Thailand’s $46.6 billion surplus with the United States with its $45 billion deficit with China.
Basically, Thailand’s deficit with China since 2018 grew from $19.6 billion to $45 billion. At the same time, the economy has only shown marginal or lacklustre growth, certainly under 2%. However, its trade surplus with the United States swelled from $17 million to $45.6 billion.
Certainly, for an economy with a GDP of only $528 billion, this should have been a major plus. However, it was all lost as the profits were diverted back to China. Not for instance as it would with hard negotiations and US investment from reputable partners. Undoubtedly American firms drive a hard deal but the deal later has substance.
Therefore, the economist—his name is Amonthep Chawla, Head of Research at CIMB Thai Bank—called them ‘Zero Dollar’ Thai exports. It means that Thailand is simply not benefiting from trade with China.
New export controls and tightened document scrutiny to address Thai links to massive Chinese tariff evasion
In the meantime, Minister of Finance Mr Pichai is preparing his plan. On Friday, the Director-General of the Department of Foreign Trade revealed that a crackdown on certificates of origin for Thai exports is understood to be underway.
Significantly, any certificate will in the future be signed only by the Ministry of Commerce. Previously, both the Federation of Thai Industries (FTI) and the Thai National Shippers’ Council could provide such authentication.
The Ministry of Commerce has now taken over exclusive control of issuing these origin documents to limit abuse, and the government has added nine more product groups to its 49-item watchlist, including steel, copper wire and aluminium. These steps aim to address one of Washington’s primary complaints—that foreign goods, particularly Chinese, are being routed through Thailand to evade tariffs.
Beijing-backed firms in Thailand under scrutiny as grey capital links threaten Thailand’s national interest
After that will come another challenge. That will mean resisting the juggernaut of Chinese industry dumping uncalled-for products in Thailand. Certainly, this is also not straightforward. For instance, it may come with some Chinese investment in Thailand.
Of course, we have seen with the stories of China Railway Group (CREC) and Xin Ke Yuan Steel Co. that even large Chinese investments come with grey capital characteristics. For instance, two of the shareholders of the Chinese firm at the centre of the collapsed Chatuchak building have been revealed by the Department of Special Investigation (DSI) as ordinary labourers—basically, men earning approximately ฿10,000 a month—who were listed as major Thai shareholders.
On Friday, the Board of Investment (BOI) suspended investment privileges for Xin Ke Yuan Steel Co. At the same time, the Rayong factory of the firm was raided for the third time since December 2024. The firm was established in Thailand in 2011 with a capital of ฿1.53 billion.
Chinese re-export factories pose a growing risk to Thailand’s trade credibility and economic gains
Therefore, we can expect such firms to establish in Thailand with the primary purpose of boosting income and returns to China. In turn, they will import products from China and later export them to the United States. Consequently, this will, in essence, cause damage to the Thai economy as it does now. At the very least, it limits its potential.
At this time, Thailand finds itself at a crossroads. A dangerous vista has unveiled itself. Policies pursued by successive governments over the last 20 years have drawn its economy closer to China. Nonetheless, since 2018 and the first Trump era, the path has unravelled.
The government, for instance, must consider the Regional Comprehensive Economic Partnership (RCEP). Significantly, India withdrew from this pact in 2019 as it was being formalised.
It is questionable whether Thailand should not have also. Undoubtedly, Thailand must decide if it wishes to be part of a United States–dominated economic and geopolitical world or China’s. That ultimately is the question that everything boils down to.
Thai policy future hinges on a choice between deepening China ties or pivoting towards the United States
Meanwhile, the global economy is also bearing the weight of these protectionist measures. SCB EIC now forecasts global growth at just 2.2% for 2025, down from 2.8% in 2023.
The US, despite initiating these tariffs, is expected to slow to 1.3% growth due to policy-induced trade friction. China’s own outlook has been clipped to 4.1%, in part due to internal imbalances and growing external pressures. However, these figures and all data from China are now openly dismissed by serious economists.
In Thailand, the policy response is expected to be monetary as well as diplomatic. Analysts anticipate that the Bank of Thailand’s Monetary Policy Committee will cut interest rates further, possibly down to 1.25% by the end of 2025. This at length will help cushion the impact of trade volatility. Officials are also seeking to manage capital outflows as the baht has weakened sharply, opening the day at ฿34.70 to the dollar.
The Thai government’s room for manoeuvre now depends largely on the upcoming talks in Washington. Alongside enforcement of tighter trade controls, Thailand is reportedly prepared to offer to import more American products. For instance, liquefied natural gas, agricultural products and military equipment. At the same time, it will eliminate certain non-tariff barriers and tackle long-standing concerns about intellectual property and labour rights.
Thai strategy of rate cuts and US concessions aims to shield the economy from global trade headwinds
Ultimately, the success of this strategy may define Thailand’s economic outlook for decades to come. The country must negotiate a world where trade blocs are reasserting borders. At the same time, trust between nations is eroding and the rules-based order that once guided commerce is in retreat.
US offers a 90-day tariff pause but Thailand must move faster as it already faces shaved GDP in 2025
Commerce Minister confirms a Thai European Union Free Trade Pact could be negotiated by Christmas Day
Thailand urged to be cautious about US concessions as it weighs its hand in expanding Trump Trade War
PM addresses the nation in shock over last week’s earthquake and this week’s Trump tariff bombshell
Industry warns the impact of Trump’s tariffs could be cataclysmic. Opposition MPs criticise, inert confusion
Whether Thailand leans West or East or finds a way to balance both, the coming weeks may prove decisive.
However, any attempt at balancing China and the United States may prove an increasingly difficult and indeed costly proposition. President Trump has raised the stakes and made the fence or tariff wall suddenly a lot sharper, bigger and more uncomfortable.
Join the Thai News forum, follow Thai Examiner on Facebook here
Receive all our stories as they come out on Telegram here
Follow Thai Examiner here
Further reading:
US offers a 90-day tariff pause but Thailand must move faster as it already faces shaved GDP in 2025
PM addresses the nation in shock over last week’s earthquake and this week’s Trump tariff bombshell
Finance Minister to travel to US to import more US food and motorbikes while lowering Thai tariffs
Trump’s trade war coming down hard on Thailand despite reports of talk. Reciprocal tariffs days away
Trump Presidency already having a heavy impact on Thailand even before he talks trade with Bangkok
Trump Presidency already having a heavy impact on Thailand even before he talks trade with Bangkok
