US President Trump's signing of two executive orders on March 31, 2017, marked his first step toward tackling the persistent US trade deficit. Among the 16 countries on which these measures are focused, Thailand (11th ranked), had a trade surplus of over USD10 billion with the US in 2016. Within 90 days of these orders, US actions toward the named trade partners should be clarified.
KResearch is of the view that, at this stage, reductions in imports may not yet be resorted to as an extreme tool of protectionism, given the high dependency of US households on imported consumer products. Also, the adoption of a border adjustment tax (BAT) would likely face massive resistance in the country. Therefore, the US may opt to place more pressure on trade partners through targeted measures toward each country and each product, including anti-dumping and countervailing duties (ADs and CVDs), as well as GSP revocations or other non-tariff measures.
Possible impacts on Thailand could involve around one-fifth of our exports to the US, or 20.6 percent of our overall exports. These products have a combined value of USD5.039 billion and are considered sensitive item, which businesses should be well aware of. They comprise exports that are subject to ADs/CVDs and those now enjoying GSP. Whether pressure is intensified on these products or a more extensive review is undertaken, the degree of impact will depend on the intensity of such measures, and will thus be closely monitored.
Aside from the direct impacts, Thai exports may be indirectly affected by being components of China's and Japan's supply chains if the US implements trade measures against them. Products to face such risk include auto parts, computer peripherals, electronic equipment and plastic pellets that Thailand exports to both countries. Looking ahead, the US may initiate negotiations with Thailand to explore ways for us to open up our market to US goods and services, thus intensifying competition in our domestic market.
However, KResearch foresees a positive outlook in the US market this year after our exports grew 7.6 percent YoY during January-February. New US trade measures are expected to be ready by 4Q17, but as such would not affect our exports to the US in 2017. The full impact might be seen next year.
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