Expanding Ambitions of Thai Exporters Amid Apprehensions Over US Tariffs
In a bid to address the challenges faced by Thai exporters due to the reduced but still significant US tariffs on Thai goods, the Thai Shippers' Council (TNSC) has urged several key measures. The tariffs, now at 19% (down from 36%), remain high compared to Vietnam and Malaysia's tariffs of 20% and 25% respectively.
The TNSC is advocating for continued negotiations with the US to secure even lower import tariffs, aiming to reduce the substantial tariff burden on Thai exporters and preserve competitiveness. They are also highlighting the need for sharing the tariff burden with US importers, who may negotiate purchase prices to distribute costs, potentially impacting Thai exporters' profit margins directly.
To mitigate downstream effects on domestic producers who rely on exports, the TNSC is calling for measures to support the broader supply chain. This includes working with the Thai Ministry of Commerce and financial institutions to implement support initiatives such as extending soft loans, boosting efforts to find new export markets, preventing transshipment, and curbing substandard goods sales.
The TNSC is urging collaboration between government, private sectors, and financial institutions through planned memorandums of understanding to strengthen support structures for exporters affected by the tariffs. They are also recommending reducing business operating costs to counter the challenges posed by the remaining 19% tariff rate, including adjusting financial costs, lowering energy costs, and slowing the rate of increase for labour costs.
The TNSC anticipates overall export growth of 5-7% for 2025, aided by a reduction in US tariffs on Thai goods. However, they have expressed concerns regarding rising costs and diminishing profit margins despite the tariff reduction. To enhance the competitiveness of Thai enterprises, they suggest expediting liquidity support and ensuring adequate working capital for businesses venturing into new markets.
The clarity in tariff rates is projected to have a favourable impact on Thai exports in the latter half of the year. The reduction in US tariffs on Thai goods was the outcome of negotiations with the United States regarding the "Reciprocal Tariff" on Thai imports.
The TNSC's recommendations come as American consumers may face increased product prices as a result of the reduced US tariffs on Thai goods. Reduced exports to the United States for consumer goods could lead to global price competition, with rival nations potentially diverting their products to other secondary markets.
To alleviate pressure on domestic producers, the TNSC proposes strictly regulating imported product standards. Domestic upstream raw material producers in Thailand may experience a negative impact due to negotiated raw material prices by export-oriented manufacturers to reduce overall export costs.
Thanakorn Kasetsuwan, president of the TNSC, confirmed that the new tariff rate met the private sector's expectations. The new tariff rate is now closely aligned with those levied on key regional competitors.
In conclusion, the TNSC's proposed measures aim to ease the pressure on exporters, safeguard domestic industries linked to exports, and help maintain Thailand’s export growth forecast at 5-7% for 2025 despite the tariff challenges.
- The TNSC is advocating for lower import tariffs on Thai goods, arguing that the current tariffs still significantly affect Thai exporters, especially when compared to those of Vietnam and Malaysia.
- To support the broader supply chain that relies on exports, the TNSC is recommending initiatives such as extending soft loans, finding new export markets, preventing transshipment, and curbing substandard goods sales, in collaboration with the Thai Ministry of Commerce and financial institutions.
- In addition to tariff negotiation, the TNSC is suggesting measures to reduce business operating costs, including adjusting financial costs, lowering energy costs, and slowing the rate of increase for labour costs.
- The TNSC expects export growth of 5-7% for 2025, benefiting from a reduction in US tariffs on Thai goods, but they are concerned about rising costs and diminishing profit margins due to the tariff reduction.
- The TNSC proposes regulating imported product standards to protect domestic producers and upstream raw material producers in Thailand that could be negatively affected by the reduced tariffs.
