The Impact of the China-US Trade War on the Thai Economy

Abstract

               This article aims to 1) analyze the economic policy context and trade war measures between China and the United States during 2018-2025, and 2) assess the impacts on the Thai economy in the dimensions of trade, investment, and industry, by using documentary research methods from reliable secondary sources and analyzing through a framework of three economic impact transmission channels: trade, investment, and industry and employment. The study found that the trade war between China and the United States began in 2018 due to U.S. dissatisfaction with the trade deficit with China, intellectual property violations, and concerns over the Made in China 2025 policy. Since both countries have large economies, accounting for 43 percent of the world’s gross domestic product (GDP), the resulting trade war has had effects on the global economy, including impacts on the Thai economy, such as 1) in trade, Thai exports have slowed due to uncertainty, and foreign manufacturing sectors have delayed orders or imports of capital goods from Thailand. 2) In terms of investment, China may relocate production bases to invest in Thailand. Thailand exports some products to replace goods from China and the United States that face high import tariffs. Thailand may also face risks from China’s market dumping that affects Thai producers. 3) In terms of industry and employment, certain industries benefit from the relocation of production bases, but many industries are impacted by import tariffs, leading to reduced orders and increased production costs, resulting in decreased employment, especially in export industries. The resulting impact brings important policy recommendations: Thailand should accelerate the utilization of production base relocation, alongside trade negotiations to diversify export markets and strengthen competitiveness, to cope with uncertainties from the trade war in the long term.