Trump’s Trade War Threat Forces Thailand into Desperate Fire Sale
The global economy: a game of whack-a-mole, or perhaps a highly contagious virus. We thought we’d developed herd immunity against protectionism, inoculated by decades of trade agreements and the gospel of comparative advantage. But the antibodies are failing. The ghost of trade wars past is back, rattling its chains, this time forcing Thailand into a desperate dance to avoid a tariff pummeling from a United States perpetually suspicious of being bilked. Their aggressive proposal, reported by Khaosod, to slash their $46 billion trade surplus, is a chilling reminder: in a world tilting towards economic nationalism, even relatively successful exporters live at the mercy of powerful, and often capricious, patrons.
Thailand’s Deputy Prime Minister Pichai Chunhavajira, in a flurry of last-minute negotiations, is offering everything short of relinquishing sovereignty. Zero tariffs on US goods, a strategic embrace of Boeing aircraft (perhaps diverting orders from Airbus), and pledges for ever more American LNG. It’s a fire sale, a preemptive surrender, designed to appease a Washington seemingly allergic to trade deficits, regardless of the underlying macroeconomic realities. The aim: to avoid a 36% tariff that would cripple key sectors of Thailand’s economy and undermine its already fragile political stability.
“We have proposed 0% tariffs on many items, which is considerable, and we are confident that Thailand’s economic structure and close cooperation with the US will yield positive results,”
But is this panicked performance truly addressing the underlying ailment, or simply treating the symptoms? The problem, as ever, is the profound asymmetry of power. Thailand’s trade surplus, a product of its export-oriented economy, strategic industrial policies, and relatively lower labor costs, becomes a lightning rod for American anxieties about deindustrialization and the perceived loss of economic control. But this surplus also reflects a broader global savings glut, with countries like Thailand channeling their excess savings into the US financial system, paradoxically keeping American interest rates low and fueling consumption. The problem isn’t just Thailand; it’s the global architecture itself.
This isn’t just about Thailand. It’s a microcosm of the tectonic shifts reshaping global trade. The specter of Donald Trump, even from Mar-a-Lago, continues to loom, not just as a political force, but as an intellectual one. His “America First” approach, premised on zero-sum thinking and a relentless pursuit of perceived “wins,” has legitimized a worldview where international cooperation is viewed with suspicion and trade surpluses are considered personal insults. Other nations now operate on the understanding that the United States might unilaterally rewrite the rules of engagement, that no agreement is sacred, and that economic coercion is a legitimate tool of statecraft.
The focus on bilateral trade balances is, in many ways, a deliberate distraction. It obscures the intricate webs of global supply chains, where goods cross borders multiple times before reaching their final destination. A German car, for example, may rely on components manufactured in a dozen different countries, including the US. Attributing the entire trade deficit in automobiles to Germany is thus deeply misleading. A more nuanced approach would recognize that trade deficits can be a symptom of a healthy, attractive investment climate, and focus instead on addressing demonstrably unfair practices, such as intellectual property theft, forced technology transfers, or egregious state subsidies that distort market competition.
And what about the BRICS? Pichai acknowledges needing “to look deeper into what Donald Trump means” by imposing tariffs on some BRICS nations, including Thailand. It’s a telling admission of the long shadow cast by a single figure, even outside formal office. This threat itself functions as a policy, encouraging decoupling and regionalization in ways that render globalization a precarious enterprise, constantly vulnerable to the whims of great power politics.
The larger, more fundamental, question is whether this reactive, piecemeal, and ultimately transactional approach to trade policy can ever deliver lasting stability. As Dani Rodrik, a leading scholar of globalization, has argued, globalization requires not just open borders and free capital flows, but also robust domestic social safety nets, strong labor protections, and policies that actively address inequality. Without these, trade inevitably becomes a convenient scapegoat for deeper economic anxieties, fueling resentment and political instability. The chickens, in other words, eventually come home to roost.
Thailand’s predicament serves as a stark and unsettling reminder: the global trading system is not a self-correcting mechanism; it’s a delicately balanced ecosystem, easily disrupted by short-sighted policies and power imbalances. The obsession with bilateral trade deficits, the weaponization of tariffs, all serve to undermine the foundations of a stable and equitable global economy. The short-term political gains may be alluring, but the long-term costs — a fragmented world, reduced economic growth, and increased geopolitical instability — are a price no one can truly afford. The world may need more than whack-a-mole, but perhaps even a reset.
