“No matter who wins the election, the US government will focus on fixing the internal economy as an urgent agenda item, while the US will continue to play its role as one of the world’s leaders and maintain trade relationships in the international market,” said Wiboonlasana Ruamraksa, permanent secretary of the Commerce Ministry.
However, the new president’s policy towards trade partners, especially China and Trans-Pacific Partnership (TPP) members, will be a crucial factor in challenging global trade and Thailand’s exports, the experts said.
Nopporn Thepsithar, president of the Thai National Shippers Council, said that whether Donald Trump or Hillary Clinton wins the election, it should not have a big impact on global trade, as both are concerned largely about the US economy. However, Thailand should continue to move on participating in international trade pacts to ensure the country’s competitiveness in the trade liberalisation era.
Wiboonlasana said Clinton’s policy would benefit international trade more than Trump’s, which is quite protectionist and would cause fragile global economic growth. That would challenge the growth of Thailand’s exports to the United States in the long run.
For the TPP, a Trump victory would benefit Thailand, as the Kingdom has not yet joined the pact, she said. Trump vows to cancel the TPP if he is elected as president.
However, if he were to hike duties on imports from China, it
would hurt Thai exports, as Thailand is one of the major suppliers to China’s factories for re-exporting to the US market.
According to the Commerce Ministry, the United States is Thailand’s fourth third-largest trading partner after China and Japan. Last year, two-way trade was worth US$37.92 billion, or 9 per cent of Thailand’s trade.
Thailand’s exports to the US were worth $24.05 billion, while it imported $13.86 billion worth of merchandise.
Professor Arayah Preechametta, an economics lecturer at Thammasat University, said that if Clinton won, she would apply tax measures as significant tools to deal with the inequitable situation in society, such as increasing the income tax on the rich as well as other business taxes.
She would also launch measures for government expenditures to support the country’s education, social security, health insurance and infrastructure investment.
However, if Trump won, he would focus on job creation in his own country.
It is highly possible that a Trump administration would introduce a policy on import taxes and non-tariff barriers to obstruct international trade, especially with China.
Trump has said he would renegotiate agreements with the country’s trade partners, including TPP members, and that could trigger a counterattack from those trade partners and add more impetus to the tendency against global free trade.
Trump also has a strict policy against unskilled workers who compete for jobs in the US labour market.
Surasak Dhammo, investment strategist for wealth management at Standard Chartered Bank (Thai), said financial markets were likely to feel little impact in the immediate aftermath of a Clinton win, since this outcome is broadly predicted by most opinion polls.
However, a Clinton victory combined with a Democrat majority in both houses of Congress would likely push US Treasury yields higher, and possibly hurt stocks, in the days after the election, on concerns about a rising fiscal deficit.
A Trump win, on the other hand, would be akin to the United Kingdom’s surprise Brexit vote in June. Such an outcome would likely lead to a short-term sell-off of US and Asian stocks and the Mexican peso.
It would push US Treasury yields lower and boost the US dollar and gold.
Amonthep Chawla, head of research at CIMB Thai Bank, said the market had responded positively to Clinton, and CIMBT shared that view.
However, the anti-dumping policy of both candidates could result in a drop Asean’s exports next year. This would include exports to China and intra-Asean exports.
Trump has strong feelings about withdrawing from the World Trade Organisation and shooting the TPP down. He has said he would also renegotiate trade pacts with China.
The US depends on China for 20 per cent of its imported goods and raw materials and on Asean for 7.3 per cent.
Amonthep said the demise of the TPP could be helpful to Thailand’s trade, and the Kingdom should urgently push the Regional Comprehensive Economic Partnership.
“Without the TPP, Thailand can still attract foreign investment because its borders are close to the CLMV markets,” he said, referring to Cambodia, Laos, Myanmar and Vietnam.
Currency volatility could worsen if Trump wins the election.
On the other hand, investors will move to high-risk investments in Asia if Clinton wins and the baht could appreciate more against the US dollar. The strengthening will be short-term because the market will give more weight to the interest-rate increase the US Federal Reserve is expected to implement next month, Amonthep said.
The baht should reach 35.50 to the greenback by the end of this year if Clinton comes out ahead, and if the Republican trumps her, the Thai currency should stay around Bt36, he said.