Absorption of tariff impact by trading blocs: The case of Thai exports to the US

The impact of US tariffs imposed by the Trump administration on Thailand raises concerns about the strategies the government and corporations should follow to mitigate the negative effects on Thai exports. This paper analyzes the mathematical and statistical certainties of US tariff impact absorption by the RCEP countries, considering the worst-case scenario of a 36% US tariff on Thai exports. Two independent analyses are applied here: the first relates to the certainties that RCEP countries could fully rescue Thai exports, and the second considers that these exports could be rescued by just 95%. Both scenarios use a Monte Carlo simulation method of analysis, assuming in all cases that export sales increase by 5% in all RCEP member countries where Thai exports already take place. The research focuses on the top 50 Thai exports, considering a 4-digit HS code, which accounts for a total of 65.2% of Thai exports. The results vary depending on product categories, industry, the concentration of exports in different countries, and the relative weight of the US and RCEP countries in the analysis. Nonetheless, the findings suggest that the likelihood of RCEP fully rescuing Thai exports is low, although the chances increase significantly when the rescue covers 95% of the potential damage.