Bangkok: Academics from the University of the Thai Chamber of Commerce (UTCC) have proposed a series of strategic measures to counter the potential impact of new trade barriers, including a 100% tariff on drugs, which could significantly disrupt the global pharmaceutical supply chain. These measures are aimed at mitigating the adverse effects on Thai exporters and ensuring economic stability.
According to Thai News Agency, Assoc. Prof. Dr. Anusorn Thamjai, Dean of the Faculty of Economics at UTCC, emphasized the importance of significant investment in research and development within the pharmaceutical and medical supply industry. While the intellectual property system serves to protect these investments, exceptions exist for drug patents due to the essential nature of medicines and medical supplies.
The Trump administration’s announcement of a 100% tariff increase on branded or patented drugs, effective from October 1, 2015, is expected to impact the global supply chain for pharmaceuticals. Although Thailand’s export sector for pharmaceuticals and medical products is relatively small in the US market, the country is likely to experience increased public health costs due to the higher prices of imported drugs and supplies.
The tariffs will also affect leading pharmaceutical manufacturers in Europe and Japan, with the US importing $213 billion worth of drugs last year. The increased tariffs could prompt pharmaceutical giants to relocate manufacturing plants and focus on managing supply chain disruptions rather than investing in drug innovations.
Dr. Anusorn anticipates that trade protectionist policies may extend to include a broader range of industrial products, potentially impacting Thailand’s export sector further. The recent tariff increases have targeted items such as steel, aluminum, and automobiles, and now include branded medicines, large trucks, and kitchen cabinets.
The Thai export industry must remain vigilant and prepare for potential impacts, as the Trump administration may further increase industrial import tariffs to offset revenue losses if US courts overturn current orders. Currently, Thai exports rely heavily on imported content, which could be subject to a 40% transshipment tariff, necessitating urgent trade negotiations with the US.
Additionally, the risk of a contraction in Q4 exports looms due to increased import tariffs and a slowdown in global trade value. This slowdown became apparent in August, with export growth slowing significantly compared to previous months. The Thai economy continues to grapple with an “income hole” from the COVID-19 crisis, estimated at 6 trillion baht.
To address these challenges, proactive measures are recommended to delay layoffs and promote investment in job creation, urging the Thai government to take immediate action to ensure sustainable economic growth and income distribution.