ไทย
Countdown to US tax.
Progress on the US tax issue and its impact on Thailand Dr. Poj Aramwattananon, Chairman of the Thai Chamber of Commerce and Chairman of the Board of Trade of Thailand, revealed that it is currently impossible to assess what the Thai economy and exports will be like in the second half of 2025 because up until now, there is still no certainty that Thailand will be able to successfully negotiate the retaliatory tariffs on US President Donald Trump’s imports.
Currently, the enforcement of the 36% Reciprocal Tariffs is being postponed for 90 days, which will expire on July 9, 2025. If the negotiations are unsuccessful, Thailand will be hit with an additional 36% tariff. It is believed that Thai exporters will not be able to export their products to the United States at all because the product prices will not be able to be sold in the market, which can negatively impact various exporters’ profits.
May 25th, the last lot exported
Dr. Poj added that the impact is not limited to the export or manufacturing sectors, but will spread to the supply chain or related production supply chains, which will be affected with reduced sales, having a chain effect on many other industries. Ultimately, it will affect employment in the industrial sector. If products cannot be sold, layoffs are definitely possible.
It is now found that the overall investment in manufacturing has begun to slow down, which is a result of the uncertainty of how much tariffs Thailand will be subjected to from the United States. This has caused the manufacturing and investment sectors to delay and observe the situation, and reduce production capacity to avoid the problem of increased stockpiles, with no new purchase orders. The last shipment of goods by sea to receive the original tariffs, which is the basic tariff that the United States charges from all countries at a rate of 10%, will depart the port on its last trip on May 25, 2025
Finding new markets is not easy.
As for the suggested solution to turn to new export markets, it must be admitted that Thailand’s industrial sector is currently only at level 2.0-3.5. Thai exported products have not been able to upgrade or develop to 4.0 when compared to many countries, making it difficult for Thai products to compete. Adjusting to expand exports to other markets requires investment in changing production to meet the needs of each country. Currently, adjustments are slow and have costs for adjustments; therefore, adjustment is not an easy task to do immediately.
2 Main factors that heavy risk of pulling down the GDP
Dr. Kobsak Pootrakool, Senior Executive Vice President of Bangkok Bank and Chairman of the Federation of Thai Capital Market Organizations (FETCO), revealed that according to the NESDB’s announcement of the GDP for the first quarter of 2025, there are two figures to watch out for that will put pressure on the Thai economy for the next several years.
1.) Private consumption, which expanded by only +2.6%, which is worrying. Due to the fact that normal private consumption is about 55% of the economy is a major driving force of the Thai economy. Whether it is lively or not depends on whether people spend or not. This number should expand by 5-6%, but in the last 4 quarters, it expanded by only about 3%. Part of it is probably because the Thai economy is not growing very well, and another part is because we are in a lot of debt, have high household debt, and have increased bad debt.
2.) And the next, even more worrying business field is Industrial production, because it is the sector that generates the country’s main income, which most recently accounted for about 28% of GDP. During the period when we have good expansion, this sector will be the spearhead, the main driving engine that will help push the Thai economy. During 2000-2007, it expanded at +9.5% and during 2010-2018, it expanded at +4.1%, but the last 5 quarters expanded by an average of only +0.5%.
Kasikorn Bank presents factory closure data.
Ms. Kaewalin Wangpichayasuk, Deputy Managing Director of Kasikorn Research Center Co., Ltd., revealed that the situation of factory closures continues to increase each month. According to data from the Department of Industrial Works, in the first 4 months of this year, 222 factories closed and 502 factories opened. Although the rate of openings is higher than closings, if we look at the figures each month, we will see an increase in closures. In January, there were 42 factories, in February 47 factories, in March 51 factories, and 82 factories closed in April.
When considering the size of the capital of the factories that closed, it was found that the capital size decreased from 39 million baht in 2024 to 33 million baht in 2025, reflecting that the factories that closed were small businesses or small and medium-sized enterprises (SME).
Meanwhile, if we look at the newly opened factories in the first 4 months of this year, the total investment decreased by 52% when compared to the same period last year (YOY). In the first 4 months of 2025, the total investment was 64,780 million baht, an average of 129 million baht per factory. When compared to the first 4 months of 2024, it was 136,369 million baht, an average of 208 million baht per factory. This reflects the size of new investment that is mostly smaller because entrepreneurs are more cautious.
5 Highest Closed Business Sectors
If we look at the top 5 sectors with the most factory closures, they are:
- Mining Group, which is a unique sector.
- Food and Beverage Production Group, which has been affected by the increasing number of competitors
- Metals and Steel Group;
- Chemicals Group;
- Petrochemicals Group.
Most of them have been affected by competition from imported products, rising costs, and the ongoing crisis, and then the policy of increasing import taxes (Reciprocal Tariffs) as an aggravating factor. Some places could not stand it and had to close down. However, looking ahead, there is a risk that production capacity will decline due to lost orders after the US announced clear tariff figures, which is still a concern for the manufacturing sector. The research center estimates the 2025 Industrial Production Index (PMI) to contract by -3%.
The manufacturing sector gradually reduces costs-OT.
While the net employment picture is still positive, the manufacturing sector has adjusted its working hours or overtime. It can be seen that since the beginning of the year until now, many large companies in Thailand, such as the automotive and electrical appliance groups, have announced cost reductions and improved work efficiency to observe the situation, which is consistent with companies abroad in the technology and automotive groups that have laid off employees. Therefore, looking ahead in terms of working hours or layoffs is still a concern.
Therefore, the real impact will be seen in the second half of this year or after the 90-day deadline in July. The impact will depend on how much tax we are subject to, 10% or 36%, and what the neighboring countries, including China, will be subject to. We see Thailand’s GDP this year at 1.4% if the tax is 36%, but if the tax is 10%, the economy will have upside to the manufacturing and export sectors, but will still be weighed down by the tourism sector.
Ayutthaya slows down production, halts investment.
Mr.Chaikrit Phumkhem, President of the Ayutthaya Provincial Industrial Council, revealed to “Prachachat Business” that Trump’s tax policy has created business uncertainty, causing all types of business groups to delay production and investment. especially medium-sized and small-sized businesses.
United Kingdom’s Conclusion on Negotiation with the USA
In terms of international progress in the negotiations between international countries and the USA on the Tariff issues, the UK was the first country to reach an agreement.
The UK agreed to reduce tariffs to 1.8% from 5.1%, while the US kept the basic tariff at 10% but reduced tariffs on certain types of steel and aluminium from the UK. As for the automobile tariff, the import quota for cars from the UK is set at a tariff rate of 10% for only the first 100,000 cars. On the other hand, the UK has also agreed to buy $10 billion worth of Boeing planes and eliminate import tariffs on beef and other agricultural products, including ethanol for beer production. However, the deal is not immediate and will require months of signing and legal paperwork.
China-Japan negotiations partially concluded
China is another country that was able to reach a temporary agreement with the United States after being hit with a tariff wall as high as 145%, while China also raised the same tariffs at a rate of 125%. The negotiations concluded that both sides would reduce the tariffs between each other. The result is that the United States will charge China 30% and China will charge the United States 10% for a temporary period of 90 days.
In addition, Japan, which was the first country to formally negotiate with the United States, has already negotiated twice and started the third round on May 23. However, there has been no progress as Japan wants to remove all tariffs, especially the auto sector, steel and aluminum, which are rated at 25%, while the United States wants to focus only on retaliatory tariffs.
Vietnam-Indonesia’s Negotiation Result
Vietnam, despite being a middle-income developing country, has the third-largest trade surplus with the United States. It is also an important country for China to expand its industrial production base. In the past, Vietnam has tried to offer bargaining terms to please the United States as much as possible, from reducing tariffs to zero, promising to buy more Boeing aircraft, and importing more LNG gas, hoping that the United States will respond in the same direction.
However, in the last negotiation, both sides said they had made positive progress and were close to reaching a consensus, with further talks needed in early June.
Indonesia, A government delegation met with U.S. Trade Representative Jamieson Greer and U.S. Commerce Secretary Howard Lutnick in mid-April. The two sides agreed to conclude negotiations within 60 days. Indonesia proposed an additional import plan from the United States worth more than $19 billion, including energy, agricultural products, and industrial capital goods. Indonesia will also promote investment in key minerals such as nickel in the United States.
Read more at: https://www.prachachat.net/economy/news-1816773