Trump’s trifecta win means Thailand faces economic uncertainty. With full control of Congress, he can push through radical policies, including higher tariffs, trade sanctions and aggressive measures targeting China, putting Thailand’s economy at risk.
News in the last 24 hours that the US President-elect is to rule with a majority in both the US Congress and Senate will not be welcomed in Bangkok. In fact, it means that an even more radical Trump second presidency can be expected. In particular, in the next two years, as Trump pushes to execute his extraordinary agenda, including massive tariffs on imports.
At this time, there is no disguising that the news that President-elect Donald Trump is to rule with a trifecta, meaning control of the executive, the Senate, and Congress from January 20, is not good news for Thailand.
Thai Finance Minister Pichai Chunhavajira’s warning last week of a ‘one man show’ US administration is coming into focus.
The Republican Party’s victory in the 2024 midterm elections has given Trump’s party full control of the U.S. Congress.
Republicans’ victory in 2024 midterms gives Trump full control of Congress, allowing radical policy changes
This means Trump can now push through his most radical policies. With control of both the Senate and the House, he can execute his agenda without significant opposition.
Thailand faces the very real possibility of a 20% tariff on all its exports to the U.S. The U.S. is Thailand’s largest export market, and current tariffs are only about 2%. If Trump raises these tariffs, it will create severe disruptions for Thai exporters.
Key sectors, such as electronics, automotive parts, and agriculture, will likely be hit hardest. In addition to higher tariffs, Trump’s administration may target China’s use of Thailand as an offshore base.
Trump’s 60% tariff on Chinese goods routed through Thailand could devastate Thai trade and economy
A 60% tariff on Chinese goods routed through Thailand would devastate this trade flow. Trump’s growing hostility toward China makes this scenario increasingly likely.
Many Chinese companies rely on Thailand to manufacture goods before shipping them to the U.S. Trump’s policies will likely lead to inflationary pressures.
U.S. interest rates may reverse course and rise, strengthening the dollar. This would make the baht weaker, complicating imports and pushing up inflation in Thailand. Thai consumers would face higher prices for foreign goods.
Local businesses might struggle to stay competitive in global markets. Stronger demand for U.S. products could further hurt Thailand.
As the U.S. economy strengthens, Thailand could lose out on global market share. The increased competition could negatively affect Thailand’s export-driven industries.
These shifts may also lead to less favourable trade terms for Thailand in the long run.
China’s struggling economy and Thailand’s vulnerability may worsen manufacturing sector crisis under Trump
Compounding these issues is the state of China’s economy. The Chinese economy is in trouble, with internal struggles and a collapsing property sector.
As China faces these challenges, it may turn to dumping cheap goods on Asian markets. Thailand, already struggling with manufacturing pressures, has already shown itself vulnerable to this practice.
The Thai government, led by Minister of Commerce Pichai Naripthaphan, has remained cautiously optimistic. While a positive attitude is important, Thailand must prepare for difficult times ahead.
The government needs to manage these risks carefully to avoid exacerbating the country’s vulnerabilities. The first Trump presidency caused significant damage to Thailand’s economy from 2017.
The imposition of tariffs and the trade war with China disrupted many industries. The second Trump administration, with greater power in Congress, will certainly push even more aggressive policies.
With control over both the executive and legislative branches, Trump has more freedom to act.
Thailand’s economy faces a bumpy ride as Trump gains full control of Congress, increasing global risks
Republicans have secured control of both the House and the Senate. The GOP has picked up key seats in Pennsylvania, Ohio, West Virginia, and Montana.
Trump now has full control over Congress, meaning he can easily push his policies forward.
This unified government will allow him to enact his agenda without significant opposition from Democrats. While Trump’s power is greater, there are limits.
Most major legislation still requires a 60-vote threshold in the Senate. This means that Democrats could potentially block some of Trump’s priorities, including trade, immigration and healthcare reforms.
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However, Senate Republicans are likely to back Trump on most issues, allowing his agenda to move forward. For Thailand, this means higher tariffs, more aggressive trade policies, and stricter measures on Chinese-linked exports. The risk of a trade war escalation is high. With the U.S. firmly in Trump’s control, Thailand must be prepared for more challenging economic conditions.
At this time, Thailand’s economic future looks uncertain with Trump’s return to power. With greater control over Congress this time, the risks for Thailand have only increased since 2017. The Thai government and indeed the wider world must be prepared for a bumpy ride ahead.
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