Throughout 2018, the US administration's continual pursuit of protectionist trade measures has tended to increase volatility in global trade. Most recently, President Donald Trump announced that new “safeguard" tariffs would be imposed on steel and aluminum imports at 25 percent and 10 percent, respectively. Although no details have been released yet, it seems undeniable that trade with the US will become difficult, going forward.
As for Thailand, the direct impacts of those new tariffs will likely be felt in our construction materials and primary steel products, e.g., steel pipes, steel plates, pre-stressed concrete rebars and aluminum sheets. However, consumer goods such as metal furnishings and household items made from iron/steel will likely not be included in the “safeguard" list. Indirectly, this measure may lead to an oversupply of steel and aluminum products, and subsequently lower prices for products in those categories. Therefore, Thailand will import cheaper materials for our downstream production; segments benefiting from such a situation would include automobiles, construction, aviation and aluminum cans for foodstuffs. However, intermediate components made of steel and aluminum with lower prices than ours could become more competitive against our exports. Prospective rivals to Thailand that we should be vigilant of include Canada, South Korea and China.
In addition, KResearch holds the view that the US may impose this “safeguard" measure on frozen shrimp and fish in the future. If this happens, many Thai businesses will be affected and those having the US as their main export destination should plan for risk diversification through serious investigation into new alternative markets. Because this new measure is largely seen as leading to comprehensive trade protectionism, it will no longer be viable to depend solely on the US market for exports.
Since early this year, US moves toward trade protectionism have intensified, and the proposed new tariffs may be viewed as triggering a trade war with their trade partners, reiterating that the US will become more aggressive in protecting their own interests. Possible trade disputes could spill over into many key economies across the globe and also into many product categories, which would inevitably be hurtful to Thai industries and trade, depending upon our role as the buyers or sellers of such goods in world markets.