Trump tariffs to bite in 2026, Thai exports may shrink

Thailand’s exports in 2026 could slow sharply — or even contract — as the full-year impact of US tariff policy begins to bite, with weaker momentum also expected in shipments to China, the Trade Policy and Strategy Office (TPSO) said.

TPSO forecasts Thailand’s 2026 exports in a range of -3.1 percent to +1.1 percent, warning that the fading of last year’s front-loading effect and a clearer full-year impact from US tariff measures are key downside risks.

Thailand’s economy is also expected to expand only modestly. Citing International Monetary Fund (IMF) and World Bank projections, TPSO said Thailand’s 2026 GDP growth is estimated at 1.6–1.7 percent, reflecting rising external and domestic challenges.

Nantapong Jiralertpong, Director-General of the Trade Policy and Strategy Office (TPSO), said risks include high household debt weighing on domestic purchasing power, a limited labour market recovery, a slowing global economy, and weaker growth in key partner markets — the US, China and Europe — which would directly hit Thai manufacturing and exports. He also cited geopolitical uncertainty as a driver of higher energy costs and supply-chain disruption.

Support factors — but bigger downside risks

TPSO said some factors could still support exports, including looser monetary policy among major trading partners, global concerns over food security amid climate volatility supporting demand for Thai agriculture and food, and the technology cycle (AI and EV) lifting demand for electronics where Thailand is a key production base.

It also pointed to supply-chain diversification, with production shifting to Thailand to avoid tariff barriers — benefiting products linked to Chinese investment such as solar cells and PCBs — and the expansion of new markets including India, the Middle East and CLMV.

On the risk side, TPSO highlighted rising protectionism — especially US tariff policy — as a key threat expected to show more clearly in 2026. It also flagged “payback” from inventory drawdowns after last year’s front-loading, weaker demand in major markets due to inflation and domestic economic strains, baht volatility with a risk of appreciation hurting price competitiveness, and lower global crude prices pressuring exports tied to oil-related products such as chemicals and plastic pellets.

Copyright: Asia News Network/The Nation