Southeast Asian currencies and stock markets decline due to increased US tariffs
PUBLISHED: April 3, 2025, at 10:00 AM
Thailand’s Prime Minister has announced plans to negotiate with the United States amid the recent announcement of substantial tariffs on US imports. In a press briefing, Prime Minister Paetongtarn Shinawatra stated, “We won’t allow GDP targets to be missed. We have a robust plan in place.”
She emphasized that several proactive measures are being prepared, including sending the permanent secretary to engage in discussions with US officials. “I believe negotiations are still possible,” she remarked.
Deputy Finance Minister Julapun Amornvivat acknowledged the government was aware of potential tariffs, although the severity exceeded expectations. “Our approach must be based on understanding,” he noted, adding that discussions would focus on identifying specific unfair product classifications for potential adjustments.
According to InnovestX Securities, the newly imposed tariffs could reduce Thailand’s GDP growth forecast from 2.5% by as much as 1.2 percentage points. The central bank’s anticipated interest rate cut is unlikely to significantly bolster the economy in light of these challenges.
Thailand is included in the “Dirty 15” list of nations affected by the US tariffs, which impose an average of 2% on Thai imports compared to an 8% average tariff on US products levied by Thailand.
In response to the tariff announcement, Southeast Asian currencies and stock indices experienced declines. The Thai baht fell by as much as 0.8% against the US dollar, while the Malaysian ringgit and South Korean won also weakened. Singapore’s main stock index decreased by up to 1.3% before somewhat recovering, and Malaysia’s index dipped by 0.7%, as the region grapples with underperformance in global equity markets this year.
“Asian emerging markets are undoubtedly the hardest hit by this tariff announcement,” commented analysts from ING Bank. They predict a global risk-off sentiment, expected to coincide with reduced market rates.
Southeast Asia is particularly affected by the reciprocal tariffs, with Vietnam facing a 46% increase, Thailand a 36% increase, and Indonesia a 32% increase in tariffs. The region’s primary trading partner, China, is also facing substantial tariffs, totaling 54%.
As the situation develops, investors are keenly observing any retaliatory actions from affected countries, which could escalate existing trade tensions. While some nations have ruled out retaliation, the potential responses from economies such as China remain under close scrutiny.
