FUTURE IMPERFECT
US-Chinese trade war could dent Thai GDP
Automotive experts warn that Trump’s yet-tobe-announced policies could hit Thai exports of car parts and tyres to the US.
Thailand’s shipments of auto parts and tyres to the US are likely to suffer from the protectionist trade policies of US President Donald Trump as they are exported directly to the US, experts warn.
Speaking at a seminar entitled, “Foreign trade policies under President Trump and its impact on Thailand”, organised by the Thai Automotive Industry Association (TAIA) yesterday, many experts said Mr Trump’s policies have yet to have any direct impact on Thailand’s automobile industry, apart from parts and tyres.
Krasae Rangsipol, senior economist from the Siam Commercial Bank Economic Intelligence Center (SCBEIC), said the US imports completely built-up (CBU) cars mainly from Canada, Mexico, Japan, Germany and South Korea, while it has imported a small volume of completely built-up Mitsubishi eco-cars from Thailand in recent years. The volume is a mere 0.01% of the US’s car import value.
But the US imports auto parts and tyres from Thailand, which respectively account for 8% and 35% of total imports of the products.
He said that these two sectors are at risk of being affected by the US’s border adjustment tax, or BAT, once it is imposed.
At present, the BAT and other tariff-barrier policies which are primarily aimed at China and Mexico — two major exporters to the US — have yet to go into effect, said Mr Krasae.
According to SCBEIC statistics, annual imports from China total US$347 billion and account for 44% of the total, followed by Japan ($73.4 billion), Germany ($67.5 billion) and Mexico ($61.1 billion).
Mr Krasae said overall exports from Thailand to the US totalled $18.3 billion.
“I don’t think Thailand will be the US’s target as the trade deficit remains small and is not big enough for the US to issue any tariff-barriers,” he said.
But SCBEIC outlined how any trade war between the US and China might affect Thailand. In the worst-case scenario, the dispute might shrink the Thai economy down by 8.8% this year from a GDP growth forecast of 3.4%.
A trade war could further lower Thailand’s exports by 11% from a projected expansion of 2.2% this year and shave off 20% of the 34 million tourists targeted to visit the country this year.