The Office of the Higher Education Commission warns all parties to be ready to accept the policies of the new US leader after the election on Nov 5 – recommends that businesses should diversify their risks and expand their export markets to other regions besides the US.
Mr. Poonpong Naiyanapakorn, Director of the Office of Trade Policy and Strategy (OTPS), Ministry of Commerce, revealed that he is closely following the developments regarding the US presidential election on November 5 between Vice President Kamala Harris from the Democratic Party and former President Donald Trump from the Republican Party. It is expected that it will have a significant impact on the Thai economy. The policies of both parties are clearly different in the issues of trade, investment, and policies that may affect the inflation rate.
If Harris wins the election, it is expected that there will be more support for free trade, with a possible push for the US to rejoin the Trans-Pacific Partnership (CPTPP), which would be an opport
unity for Thailand to consider joining to expand trade with member countries. In addition, there may be a promotion of technology cooperation with Asian partners, which Thailand may benefit from technology transfer and investment in Industry 4.0. However, despite the tendency to take a softer approach than Trump on tariffs against China, it may still affect the supply chain linked to China, so Thailand may have to adjust by diversifying risks and finding new trading partners.
On the other hand, if Trump returns to office, there may be significant import tariff increases, especially import tariffs on Chinese goods of 60% or more. However, at the same time, it may also be an opportunity for increased production bases to be relocated from China to Thailand, and the demand for alternative products from Thailand in the US market may also increase. In addition, the US may increase non-tariff trade barriers, which Thailand needs to be prepared to adjust production standards accordingly in order to maintain competit
iveness in the US market.
A Harris win could have positive effects on investment in Thailand in several areas, particularly in clean technology and innovation. Promoting investment in renewable energy, such as solar, wind, and biomass, could open opportunities for Thai companies with expertise in these areas to invest in the United States. In addition, supporting research and development in energy storage technologies could lead to opportunities for technology transfer and co-investment in high-performance battery production for Thailand. In terms of innovation, Harris’ policies could promote investment in 5G and artificial intelligence (AI), allowing Thai telecommunications and software companies to join global supply chains. Supporting the development of smart cities could provide opportunities for knowledge and experience exchange between the two countries. There could also be opportunities for joint ventures between Thai and U.S. companies in developing modern agricultural technology (AgriTech), which is
Thailand’s strength.
On the other hand, if Trump wins, the ‘America First’ policy could lead to a decrease in US investment in Thailand, especially in the manufacturing sector. The use of tax incentives to attract investment back to the US could cause US companies with manufacturing bases in Thailand to consider relocating, which could affect Thailand’s electronics and automotive parts industries. In addition, there could be a slowdown in technology transfer from the US to Thailand, which could affect the development of Industry 4.0 in the long run. Investment in research and development (R and D) and innovation by US technology companies in Thailand could decrease, and access to certain advanced technologies, such as semiconductors or 5G technology, could be restricted, which could affect the development of Thailand’s technology industry.
Harris’ policies, which focus on reducing costs for working-class families and controlling the prices of consumer goods, could have a beneficial effect on Thailand’s infl
ation rate. Increasing the minimum wage and social welfare in the United States, while increasing production costs, is unlikely to have a direct impact on inflation in Thailand. Meanwhile, price controls on medicine, health care, and energy in the United States could help stabilize global prices, which would be beneficial for controlling inflation in Thailand. In addition, policies focused on controlling inflation in the United States could reduce the pressure on the Federal Reserve (Fed) to raise interest rates, which would help reduce the volatility of the baht and inflation in Thailand.
On the contrary, Trump’s policy of reducing interest rates and stimulating the domestic economy may affect Thailand’s inflation rate in many dimensions. An accommodative monetary policy may cause excess liquidity in the global financial system, leading to higher inflationary pressures in trading partners such as Thailand. Meanwhile, low interest rates may weaken the dollar, causing the baht to appreciate, affecting Thailan
d’s export competitiveness, and may lead to adjustments in domestic product prices, which directly affect inflation. In addition, rapid economic growth in the United States may increase demand for products in the world market, causing Thai import prices to rise, while inflation in the United States may increase the cost of importing products and raw materials, affecting product prices in Thailand. Finally, expansionary fiscal policies, such as tax cuts and increased government spending, may cause inflationary pressures at the global level, which will affect Thailand’s economic stability and inflation rate in the long run.
To prepare for the uncertainties from the US presidential election results and possible policies, Thailand should take action in several areas, starting with the business sector, which should diversify risks by expanding export markets to regions other than the US, as well as develop innovations and add value to products to maintain competitiveness. In addition, it should closely monitor US
trade and economic policies in order to adjust in a timely manner, and consider investing in clean technologies and alternative energy to support future energy trends.
At the national level, Thailand should accelerate the development of infrastructure and human resources to support investment in clean technologies and innovation, promote domestic research and development to reduce dependence on foreign technologies, build partnerships with other countries in the region to attract investment and build strong supply chains, and develop flexible investment promotion policies that can be adjusted to changing global situations.
In terms of economy and finance, the government should prepare measures to support the impact from the fluctuation of import prices and develop domestic industries to reduce reliance on imports. In addition, the use of tools to protect against exchange rate risks in the business sector should be promoted. Close monitoring and analysis of the situation, as well as preparation of flexible a
nd adaptable support measures will be the key to dealing with the potential impacts from the US presidential election and subsequent economic policies. Integrating cooperation between the government and private sectors will help Thailand cope with challenges and seize opportunities that may arise effectively.
Source: Thai News Agency