Exports to feel the pinch from US trade war

Exports to feel the pinch from US trade war

Jitters felt as Beijing, Washington do battle

An overhead view of cargo containers at Bangkok port. PATTARAPONG CHATPATTARASILL
An overhead view of cargo containers at Bangkok port. PATTARAPONG CHATPATTARASILL

Despite the continued growth of exports in February, a looming trade war between the US and China as well as the strong baht threatens to put a damper on outbound shipments.

A group of exporters are still concerned about protectionist US policies and retaliatory measures from affected countries, notably China, said Ghanyapad Tantipipatpong, chairwoman of the Thai National Shippers' Council (TNSC).

"If the situation between the US and China develops into a trade war, the world economy and global supply chains will be affected," she said.

Shipments of agricultural and food products will be the hardest hit if the baht continues its gains, said Ms Ghanyapad. The impact may cause export growth to drop to 5% this year, down from earlier projections of 6%, she said.

The Commerce Ministry reported on March 21 that customs-cleared exports climbed for the 12th straight month in February, fetching Thailand US$20.4 billion, driven largely by the economic recovery and rising demand from key trading partners.

Surging exports were led by cars and auto parts, computers and components, rubber products, plastic pellets, gems and jewellery, chemicals, finished oil, machinery and parts, and electrical circuits.

Exports rose to all major destination markets, especially Russia and the Commonwealth of Independent States, where they jumped 89% year-on-year last month.

Also seeing strong growth were exports to India (up 42.9%), Japan (41.1%), South Asia (29.4%) and Australia (18.2%).

Shipments to the US, the EU, the Middle East and Asean also grew.

Exports of agricultural and agro-industrial products rose for the 16th straight month in February, up 0.3% year-on-year at $3.14 billion. They were led by rice, frozen and canned poultry, tapioca products, and palm oil.

Industrial product shipments saw double-digit growth for the seventh month, up 11.5% in February to $16.5 billion, thanks to strong exports of automobiles and parts, computers and components, machinery and components, and finished oil.

But the strong baht put a dent in Thai shipments, as in baht terms exports contracted for the first time in 12 months.

Visit Limlurcha, vice-chairman of the TNSC, said shipments in March faced challenging prospects.

China's move on Monday to increase tariffs by up to 25% on 128 US products from frozen pork and wine to certain fruits and nuts escalated a dispute between the world's biggest economies in response to US duties on imports of aluminium and steel, he said.

"The US and Chinese tariffs are expected to start affecting Thai exports in the second quarter, with a clear picture expected by the third quarter," said Mr Visit.

Nonetheless, Chaichan Chareonsuk, secretary-general of the TNSC, said the US and Chinese tariffs are likely to have an indirect effect on Thai exports.

Thailand should prepare to be indirectly impacted by the US tariffs as Chinese goods are expected to flood into Asia and the Middle East, igniting fiercer competition in the world market, said Mr Chaichan.

Manufacturers in China may relocate their production bases to Asean countries, which could also hurt Thai shipments to various countries, he said, suggesting exporters ramp up efficiency to reduce costs.

Thailand's exports grew at their fastest rate in more than five years in January driven by a world trade recovery and higher purchase demand across the country's key markets.

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