Survey Report: Detailed Analysis of Trade War Impacts on Thai Consumers – Thailand Business News

The trade war is expected to increase tariffs, making imported goods like electronics and food more expensive for Thai consumers. This could strain household budgets, especially for low-income families who spend more on essentials.

The ongoing trade war, particularly the escalating tensions between the US and China is poised to have multifaceted impacts on Thai consumers. This analysis draws from recent economic research and reports to provide a comprehensive overview, considering both direct and indirect effects on consumer behavior, pricing, and economic conditions.

Background and Context

The US-China trade war has intensified, with the US imposing a total tariff of 125% on Chinese goods by April 10, 2025, and China retaliating with 84% tariffs on US goods (China–United States trade war). This escalation, marked by rapid tariff hikes in early 2025 (e.g., US increases of 10% on February 1 and March 4, and China’s 15% tariff on US goods on March 10), disrupts global trade patterns, affecting countries like Thailand, which is deeply integrated into international supply chains. Thailand’s economy, heavily reliant on exports to the US and China, faces both challenges and opportunities, with downstream effects on consumers.

Direct Impacts on Consumer Prices

Research from Krungsri Research (Impact of Trade War 2.0 on the Thai Economy) suggests that tariffs will increase the cost of imported goods, directly impacting Thai consumers. For instance, higher tariffs on Chinese goods, Thailand’s largest trading partner, will raise prices for imported electronics, machinery, and consumer products.

This is particularly evident in scenarios where the US imposes additional tariffs, leading to a 1.09% decrease in Thai exports under certain conditions, as noted in the report. The Federation of Thai Industries has warned of potential revenue losses of 900 billion baht, which could translate into higher prices for consumers as businesses pass on costs.

The Investopedia article (How Would a Trade War Affect You?) highlights that tariffs often lead to higher business costs, which are shifted to consumers, a trend likely to affect Thai households. For example, a 2011 Federal Reserve Bank of San Francisco study cited in the article shows that for every dollar spent on “Made in China” items, 55 cents goes to US-produced services, illustrating how tariffs can backfire on consumers globally. For Thai consumers, this means higher living costs, especially for imported essentials like fuel, electronics, and processed foods, with low-income households feeling the pinch most acutely.

Influx of Cheaper Chinese Goods

Another significant impact is the potential influx of surplus Chinese goods into Thailand, as noted in Krungsri Research reports. With reduced demand in the US due to high tariffs, China may redirect products like consumer electronics, textiles, and household items to markets like Thailand. This could lead to short-term price reductions, benefiting consumers by making goods more affordable. However, this “dumping” of goods, as warned by the Federation of Thai Industries, could harm local manufacturers, potentially leading to job losses and reduced wages in affected sectors. Over time, reliance on low-cost imports might stifle domestic innovation, indirectly affecting consumers through a weaker economy.

Economic Slowdown and Export Impacts

Thailand’s export-oriented economy is vulnerable to trade war disruptions. Krungsri Research’s analysis (Impact of Trade War 2.0 on Thailand’s Industrial and Service Sectors) outlines scenarios where Thai exports could decrease by -1.09% under certain tariff hikes, impacting industries like chemicals (-1.9%), textiles (-1.3%), and metal products (-0.9%). This reduction in export earnings could slow GDP growth, with estimates suggesting a potential 0.02% to 0.04% increase in GDP under optimistic scenarios, but negative effects in others. The economic slowdown could lead to lower wage growth, higher unemployment, and cuts in public spending, all of which reduce Thai consumers’ purchasing power.

For example, in Scenario 1 (10% US tariffs on China, 10-15% Chinese retaliation), industries like computers and electronics (+2.7%) and construction (+1.0%) may benefit, potentially lowering consumer costs in these sectors. However, agricultural sectors like silk-worm cocoons and wools (-0.5%) and forestry (-0.4%) could see losses, affecting consumer goods prices. In Scenario 2 (additional 25% US tariffs on Canada/Mexico), the impacts are more pronounced, with chemicals (-1.9%) and wood products (-1.5%) facing declines, further pressuring consumer prices.

Currency and Inflation Pressures

Trade wars often cause currency volatility, as noted in general economic analyses (Trade Wars – Overview, Impacts, Good or Bad). For Thailand, a weaker baht could make imports more expensive, exacerbating inflation. The World Bank blog (How are trade tensions affecting developing countries?) suggests that developing countries like Thailand face increased costs due to trade diversion, with higher inflation impacting consumers. This could raise the cost of living, particularly for imported goods, and make foreign travel or education abroad more expensive for middle-class consumers.

Opportunities for Local Substitution

Despite the challenges, there are potential benefits for Thai consumers through local production. Krungsri Research suggests that Thailand could benefit from production relocation, with companies moving factories from China to Thailand to avoid US tariffs. This could boost industries like agriculture (+7.9% in some scenarios) and motor vehicles (+2.5%), potentially offering consumers more affordable Thai-made alternatives. However, the report notes that quality and variety might initially lag, requiring consumers to adjust their preferences. Strategies to mitigate negative impacts include increasing domestic consumption and spending, as mentioned in the industrial sector analysis, which could help stabilize consumer prices.

Uneven Impact Across Income Groups

The impact on Thai consumers is not uniform, with lower-income groups likely to be hit hardest. Research from Intereconomics (Who Benefits from Trade Wars?) indicates that tariffs act as regressive taxes, disproportionately affecting those who spend a higher percentage of their income on goods. For Thai consumers, this means low-income households may need to cut back on discretionary spending (e.g., entertainment, durable goods) to afford necessities, while middle- and high-income consumers might continue spending on premium or unaffected products, potentially widening income inequality.

Recent Developments and Government Response

As of April 13, 2025, the trade war’s escalation is evident, with the US imposing a 54% tariff on Chinese goods by April 2, and China raising duties to 84% on April 9 (China hits back at Trump tariff hike, raises duties on US goods | Reuters). The Federation of Thai Industries has warned of surplus Chinese goods flooding Thailand, potentially undercutting local producers (Impact of Trade War 2.0 on the Thai Economy). The Thai government is negotiating with the US to balance trade by increasing imports (e.g., corn, soybeans, electronics) and lowering taxes on US goods, which could raise costs for consumers if import duties shift or local production is sidelined.

Sector-Specific Impacts: A Detailed Breakdown

To illustrate the sectoral impacts, the following table summarizes key findings from Krungsri Research for Scenario 1 and Scenario 2, showing how different industries might affect consumer prices and availability:

This table highlights the mixed effects, with some sectors benefiting and others facing losses, directly influencing consumer costs.

Conclusion and Long-Term Outlook

In summary, Thai consumers are likely to face higher prices for imported goods, potential economic slowdowns affecting jobs and wages, and short-term benefits from cheaper Chinese imports, though at the risk of harming local industries. The long-term outlook depends on Thailand’s ability to adapt, with opportunities for local production offering potential relief. However, the overall impact is likely negative, with increased living costs and reduced purchasing power, particularly for low-income households. Government measures to promote local goods and diversify export markets could mitigate some effects, but their success remains uncertain given the rapid escalation of the trade war.

Key Citations