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Trade war

Thailand is confident of riding out a US-China trade war

Government keeps 2018 export growth forecast unchanged at 8%

Thailand's fruit exports may rise as a result of heightened trade tensions between the U.S. and China, but other exports could take a hit.   © Reuters

BANGKOK -- Thailand sees the looming U.S.-China trade war as having mixed effects on its economy, but is planning measures to minimize risks and maintain the country's expected 8% growth in exports.

A study by the Commerce Ministry revealed that while trade tensions would lead to a rise in Thai exports for some sectors like fruit growing, raw materials and related sectors would likely be hit.

Thailand would benefit from rising exports of fresh and processed fruits to China, which has announced its intent to raise tariffs on many U.S. agricultural products.

"We are planning more Thai trade exhibitions in Chinese cities to promote Thai goods, particularly Thai fruits in order to capitalize on the situation," said Commerce Minister Sontirat Sontijirawong. "We hope this will help offset losses in other sectors that could be hit by the trade war." 

On the other hand, a significant drop in Chinese exports to the U.S. could indirectly damage Thai exports of raw materials to China, particularly those used in China's electronics and automobile sectors.

The Commerce Ministry said it would seek ways to absorb negative effects in supply chains.

"Initially, we expected a decrease in ... raw materials exports, which are used to manufacture products in China that are then exported to the U.S.," said Sontirat. "We assumed a loss of about $19 million." 

He added that the ministry will be collaborating with other agencies to support sectors likely to be harmed by a trade war.

"At this stage, we are sticking with our target of 8% growth in exports for 2018, as we see some sectors getting a boost from a trade war," Sontirat said.

The U.S.-China trade tiff began early this year after the U.S. slapped tariffs on steel and aluminum imports, mostly from China, while China retaliated by raising tariffs on imported agricultural products from the U.S.

The spat has concerned other countries, who fear global trade will be harmed by a full-blown tariff war between the world's two largest economies.

Sontirat said Thailand initially plans to leverage existing bilateral trade pacts with the U.S. to reduce the damage from the U.S. tariff hikes.

Nuntawan Sakuntanaga, the Commerce Ministry's permanent secretary, flew to the U.S. for two days of bilateral trade talks starting on April 9 under the Thailand-U.S. Trade and Investment Framework, hoping to convince the U.S. to exempt Thailand from the tariff hikes. 

"This aim is to secure Thai steel exports to the U.S. worth around $300 million a year," said Mr. Sontirat, adding that Thai trade representatives will return to Thailand by the end of April.

The U.S. is Thailand's third biggest trading partner, with Thai exports totaling about 1.4 trillion baht ($45.1 billion) in 2017. China is Thailand's largest export destination, sending goods and materials totaling around 2.5 trillion baht last year.

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