Trade War Truce Offers Temporary Respite for Thai Export Outlook

(Bloomberg) -- Export-reliant Thailand is breathing a sigh of relief after the temporary cease-fire in the trade war between the U.S. and China.

Southeast Asia’s second-largest economy is part of the supply chain feeding into China’s manufacturing industry, exposing it to the repercussions of protectionism. Recent volatility in export growth highlighted the risk.

Trade War Truce Offers Temporary Respite for Thai Export Outlook

"The truce helps to provide a bit more stability in the world economy, and, hopefully, that will link to expanded international trade soon, which would be beneficial to Thailand," Pimchanok Vonkorpon, the nation’s director general of trade policy and strategy, said in an interview Monday. "The drop in intermediate goods supplied to Chinese manufacturers should ease."

Thai export growth in November likely faced headwinds because of falling oil prices, Pimchanok said. Next year’s target of an 8 percent climb in shipments overall is challenging, she added, partly because of risks such as America’s scrutiny of automotive-sector imports.

The U.S. agreed to refrain from raising tariffs on $200 billion of Chinese goods from a current 10 percent to 25 percent as planned on Jan. 1, after a meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Argentina. But the truce only lasts for 90 days, leaving open the threat of higher tariffs if tensions flare anew.

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