Trump’s tariffs create economic turmoil for Thailand, with exports and tourism set to drop sharply in 2025. As the baht strengthens, growth forecasts are slashed, and global tensions escalate. Negotiations with the US are critical for future stability.
Thailand’s negotiation team, led by Deputy Prime Minister Pichai Chunhavajira, will meet US negotiators on Wednesday next in Washington DC. In the meantime, however, the kingdom’s economic outlook for 2025 has been thrown into disarray. Exports are expected to contract, while the baht is strengthening. This is expected to continue into the second quarter, even passing through the ฿33 to the dollar value. No one can forecast the outcome of the talks. However, analysts in Bangkok this week were discussing a 15% finalised tariff rate. In the meantime, economic growth for 2025 is certainly going to be impeded. The kingdom is facing lower exports and lower foreign tourism numbers with a particularly steep drop in exports predicted for the last quarter. Meanwhile, the vitriolic Chinese US exchanges are quite troubling.
On Friday, Prime Minister Paetongtarn Shinawatra confirmed that the Thai negotiators being sent to the US will finally sit down with US negotiators on April 23rd. Certainly, Prime Minister Paetongtarn sounded a positive note about the talks.
“The negotiation points that Thailand will use to negotiate with the United States are quite strong, and I am confident that they will be positive and beneficial to both countries. We will talk fairly. Thailand and the United States have had a long-standing relationship. I believe that it will be good,” she said.
Thailand’s government shocked by Trump’s ‘Liberation Day’ tariffs, seeing a disaster for emerging economies
However, the twist is that the Thai government and indeed many within the financial world in Bangkok are simply stunned by what has happened. Indeed, to many, President Donald Trump’s ‘Liberalisation Day’ for the US economy spells like a classic disaster for emerging economies.
Trump previously declared April 2nd “Liberation Day” in celebration of his executive order launching reciprocal tariffs. These were imposed on all US trading partners deemed to be engaging in unfair trade practices.
These tariffs, dubbed the “Liberation Day tariffs”, were to be implemented in two waves: a blanket 10% hike from April 5th, and then specific country-level tariffs effective from April 9th. Thailand, as the 11th largest trade surplus holder with the US—over $45 billion in 2024—was assigned a 36% tariff.
The impact has been heavy, continuous, and volatile from day to day.
For instance, in the aftermath of the market turmoil still being caused by President Trump’s actions, the Thai stock market, the Stock Exchange of Thailand (SET), has been decimated. It is down 19.4% since the start of the year. Meanwhile, the S&P 500 in the United States is only off by 8.2%.
Global market impact mirrors Thailand’s downturn, with losses across Asia and volatility on World markets
This trend is mirrored globally. Japanese markets have fallen 14.1%, while Indonesia, Malaysia, and Taiwan have also seen contractions ranging from 9–13%.
Following the April 2nd announcement of a 36% reciprocal tariff by Trump, there have been a number of defining and indeed terrifying moments. The most important came on Wednesday morning, April 9th, in Washington DC. During the hours leading up to lunchtime, President Trump wrestled with an emerging dangerous situation: a spike in yields of US government treasuries.
Certainly, that was the reason he quickly backtracked. Afterwards, the White House team hailed him for his nerve. At the same time, they pointed out that 75 countries were waiting to negotiate. That figure has since risen to 90.
This backtrack came in the form of a 90-day delay on the enforcement of reciprocal tariffs—excluding China, which saw its rate raised to 125% on April 10th, and then to 145%. The administration said the pause was in response to overwhelming requests for talks and in line with the policy of halting what it called decades of “taking advantage” of US trade.
Thailand, Vietnam and others anticipate a lower tariff rate as negotiations progress despite economic turmoil
Thailand is among those seeking talks. So is Vietnam. Indeed, it is reported that Vietnam’s negotiators may be happy with a 22% tariff rate instead of the original 46%. In Bangkok, analysts were this week playing with a finalised Thai tariff rate of 15%.
Even so, many of them may be underestimating the damage being inflicted on the Thai economy. Research house INVX Research this week predicted 1.4% growth for Thailand in 2025.
This is a sharp revision down from an earlier projection of 2.5%, driven largely by an expected 3% contraction in exports, with the fourth quarter forecast to see a double-digit decline.
Nevertheless, just days ago, the Fiscal Policy Office at the Ministry of Finance talked about Thailand being in a technical recession for the opening two quarters of 2025.
In short, the scale of what is happening is deeply perplexing for those in charge and even more urgent for those in business.
For instance, executives with the mighty Apple Inc. just over a week ago were trying to juggle flights for massive amounts of iPhones from India to the United States. In truth, it was seat of pants stuff with billions of dollars at stake.
Trump’s tariffs lead to immediate changes in trade dynamics, with a focus on smartphones and China
That was until President Trump allowed an exemption for smartphones and other electronic accessories from Chinese tariffs. However, the next thing was a 145% tariff imposed by the United States on China.
Then came a 125% tariff by China on America. Following that announcement, the United States underlined its 245% tariff charge on Chinese EVs and syringes.
This tit-for-tat escalation has led some observers to predict a catastrophic 81–91% reduction in US-China trade this year. If sustained, it could shift Chinese exports toward other regions such as the Middle East, Africa, and Southeast Asia, while threatening global supply chains and polarising geopolitical alliances.
At length, another deeply disturbing move this week was the suspension of all postal services to and from Hong Kong and the United States. This is an act seen only in times of war. It certainly sends a chilling signal about where this might be going.
Meanwhile, Bank of Thailand and Monetary Policy expert Sakkapop Panyanukul gave a briefing this week. In brief, he outlined the threats and dangers of President Trump’s move.
Mixed signals as capital flight continues, but Thai bond investments offer signs of stability and a higher baht
Firstly, the central bank was concerned about the stability of financial markets. Here we have mixed news. For example, while Thailand saw ฿48 billion in capital flight this year, it has simultaneously seen $38 billion invested in Thai government bonds.
This is an uncanny irony. For an economy which is dealing with structural problems and rising public and private sector debt, the country’s financial system is sound. Basically, it is underpinned by up to $250 billion in reserves and gold. Consequently, it is a very good bet in times of turmoil. At the same time, even its public debt at 64–65% of GDP is far below that of Western countries.
Therefore, the baht has been strengthening. This is happening because of uncertainty over how the US President’s drastic policies will play out stateside. Therefore, the dollar has lost 8% against Asian currencies. Notably, it has only lost 2.2% against the baht, falling from ฿34.10 to ฿33.35 so far this year.
Certainly, Thai analysts suggest that later in the second quarter, the baht may break through the psychologically important ฿33 to the dollar barrier.
At the same time, such analysis can be entirely wrong as economic trends can turn in a moment or morning. Especially with the present occupant of 1600 Pennsylvania Avenue.
Nonetheless, if this is so, it is bad news again for Thailand’s exports and indeed for tourism. The US tourism market is very important to Thailand. Last year, Thailand represented 1 million US tourists.
However, in the opening three months of 2025, this has only been 118,038. At the same time, that is just 56% of the number seen in 2020.
Pandemic’s lasting effects and global concerns deepen Thailand’s economic outlook and challenges
Undoubtedly, the pandemic particularly impacted the US market for Thailand. The drastic measures introduced by the previous government will not be forgotten easily.
Meanwhile, the Bank of Thailand is concerned about the overall global economy. This week, the World Trade Organization (WTO) warned that an instead of 3% export growth worldwide, there is now the distinct possibility of a 1.5% contraction. Admittedly, this is the worst-case scenario.
The WTO has since downgraded its global trade forecast to -0.2%, with further contraction likely if reciprocal tariffs remain in place. Least developed countries stand to suffer most, due to limited economic buffers and reliance on external trade.
On the other hand, Thailand will be facing massive goods supply from China which stands to lose between 81 and 91% of its trade with the United States as things stand. Significantly, it faces further competition from any country which loses access to the United States market.
This means impossible competition for Thailand’s already out-of-date and inefficient manufacturing sector.
Thailand faces increasing competition and reduced employment as economic conditions worsen
All of these in turn will translate into less employment, wages and overtime for Thai factory workers. Indeed, it is further expected to hit foreign tourism demand from all of Thailand’s key markets going forward this year.
Industries expected to be hardest hit include agriculture—especially rice, rubber, and processed foods—as well as electronics, machinery, and auto parts. Most of these rely on US demand or are components within global supply chains now being restructured.
Pichai’s team not to fly to the United States this week but next week as US-Chinese tensions escalate
Finance Minister to hold critical talk with Bank of Thailand Governor on US holding before he flies out
Thaksin does not rule out joining talks in the US as the Thai team finalises plans. They fly out on Thursday
All of this will be in flux until a deal is hammered out by Deputy Prime Minister Pichai Chunhavajira and his team in Washington DC. The problem may be how long these negotiations take. Some estimates suggest two months. What Thailand needs right now is certainty so that it can take stock and plan the way forward.
The Thai negotiating team is reportedly equipped with a mitigation plan for potential US import surges, particularly agricultural goods. Thailand also intends to coordinate with ASEAN counterparts to shore up regional trade resilience and diversify markets.
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Further reading:
Thaksin does not rule out joining talks in US as Thai team finalises plans. They fly out on Thursday
Trump’s remaking of World trade, if it works, will force Thailand to decide between the US and China
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
