Experts advise the government to act cautiously rather than retaliate against the United States ‘ reciprocal tax steps.
Thailand, one of the nations currently lining up to deal with the US for a potential price reduction, is one of the many nations that has been hit by a 36 % reciprocal tariff.
No particular place in the dialogue process has been revealed as of yet, despite the government’s claim that Washington has responded to Bangkok’s demand for negotiations.
An impartial political and economic researcher named Somjai Phagaphasvivat called on the government to come up with a tactical and measured response.
According to him, the federal appears to be putting its weight on its own violent business plan, and he claimed that this is a wait-and-see strategy.
President Donald Trump’s announcement of a 90-day wait in higher tariffs on several nations, including Thailand, is a sign that the US may be reevaluating the effects of its business measures, he said.
A nation you choose four strategic responses to tariff increases: plan and work quickly, as Vietnam and Cambodia have done, fight instantly, as China has, make and wait for clarity, and wait for the US to feel the effects of its own measures.
But, whether import taxes may be reduced or raised yet further remains to be seen. Thailand may find itself at a disadvantage, the researcher said, if the expensive tariffs are gradually implemented.
” The US imposes various tax prices on various nations. Our exports may suffer significantly if our companies have now negotiated lower taxes while we have not,” he said.
Prudence, no retaliation
When asked whether Mr. Somjai’s response to the US’s trade policy signaled the start of a full-fledged international trade war, he responded with caution.
He claimed that the condition has not reached the height of a world trade war, a repeat of the 1929 Great Depression, or a serious global economic downturn that is being discussed.
It took two years to resolve the problems, which involved a 90 % decline in stock markets at the time.
It was followed by World War II and the formation of the International Trade Organization in 1944, which later evolved into the General Agreement on Tariffs and Trade ( GATT ) to regulate international trade.
He claimed that the US is engaging in a traditional” chicken game” where nations with low liquidity are more likely to succumb to US industry stress. However, it’s unlikely that major players like China and the European Union ( EU) will give in.
China, which is currently at a 125 % rate, will respond with higher taxes, he said, sending a clear message that if the conflict persists, both sides will suffer.
The US leader is also putting more home pressure on himself. In only three days, US markets lost US$ 9.5 trillion, or roughly quarter of GDP. Mr. Trump won’t fall off the cliff, which may prompt negotiations, according to Mr. Somjai.
Beijing imposed tariff increases on US imports last Friday to 125 %.
Asean is a lightly bound system and is unlikely to challenge the US, according to Mr. Somjai, who questioned whether Asean would work together and discuss with the US as a whole, especially when Mr. Trump threatened to escalate sanctions against nations that would criticize him.
Following a movie conference meeting of financial officials, Asean, which is the fifth-largest economy in the world, expressed profound concern over the US’s decision to introduce punitive taxes.
Cambodia is subject to a 49 % duty and Singapore is subject to a 10 % tax in Southeast Asia.
Asean should use this chance to strengthen assistance, not to issue the US, but to be prepared to deal with international changes brought on by the US’s fresh price policy, according to Mr. Somjai.
To Thai exporters, Mr. Somjai said there is no need to fret yet because the economy is expanding at a slower rate, with growth potential slipping from 3 % to 1 % this year.
” As long as the economy turns bad, it isn’t also a full-blown problems.” In the worst case situation, there would be a battle between the US and the EU. A full-fledged international trade conflict is still unavoidable at this point, he said.
Mr. Somjai argued that Thailand may be prepared to deal with an economic slowdown regardless of how the US trade policy develops.
He also noted that nations who are closely aligned with the US are likely to follow other strategies, such as extending free trade agreements to lessen their rely on the American market.
Thailand’s trade surplus with the US was thought to be worth more than$ 40 billion last year.
Punitive steps, according to Finance Minister Pichai Chunhavajira, are not the best course of action because Thailand is a small nation and could suffer from a GDP drop of at least one percentage point.
Somjai:” Don’t issue the US.”
Opportunities exist in a turmoil.
The Thailand Development Research Institute’s senior research fellow Nonarit Bisonyabut cited the position as a chance to promote development.
He claimed that the US’ worries about taxes are not totally unfounded. He advised Thailand to examine the justification for the distinguished tax rates it had in place and whether they had acted in a certain way.
Some were intended to safeguard important sectors for national growth. However, he said,” we must ask whether they are only generating revenue for significant capital groups.”
Additionally, Mr. Nonarit urged a review of “zero-dollar imports” and to consider whether or not these permissions should be discontinued. Exports of zero-dollar goods refer to business practices that the exporting nation finds to be having little or no monetary benefit.
He argued that the government should consider alternatives to the US’s present actions because the mutual tariff is only the first step in addressing trade imbalances.
The US is also trying to persuade businesses to return their products to the US to address the nation’s debt problems.
” There will be more goes to come,” she said. We merely saw an appetiser, he said.
Mr. Nonarit argued that the Trump administration wants to alter the world trade order.
The US’s extreme legislation is unlikely to be abandoned anytime soon, and the more dangerous the situation becomes the sooner it surrenders. The US tax policy may have a negative impact on domestic demand, as high inflation would also be felt by American consumers.
People force is anticipated to rise in this situation for the reversal of the plan.
The US senator also faces legal challenges in the Supreme Court, he added, noting that there is a chance for policy change to occur without external force in six months to two years.
He argued that Thailand may lose more by trying to communicate and get offers, noting that Singapore’s strategy is also viewed as a strategy for asking the people to prepare for impacts.
” Some offers we make may be challenging to accept again. Often, we have to wait and see because Thailand is a small nation or doesn’t have little leverage to derive significant benefits from the discussions, he said.
Nonarit:” More moves to occur.