Navigating Thai Export Declines: Finding Resilience in Sector-Specific Opportunities

Thailand's export-driven economy faces a critical juncture in 2025, as U.S. tariffs threaten to disrupt key sectors and test the resilience of its manufacturing and agricultural pillars. While the outlook is clouded by trade tensions, certain industries—such as electric vehicle (EV) components, digital infrastructure, and high-value agriculture—are carving out paths to growth despite the headwinds. For investors, this volatility presents an opportunity to identify undervalued assets with structural advantages.

The Tariff Threat: A Sector-by-Sector Analysis

The U.S. tariffs, set to impose a 36% duty on Thai exports starting August 2025, have already caused ripple effects. The most vulnerable sectors are technology and automotive components, where Thailand's competitiveness is directly undercut by lower-tariff rivals like Vietnam (20%) and Latin American nations (10%). For instance, electronics exports, which grew 16.5% in early 2025, now face potential relocation of production hubs to Vietnam or Malaysia.

However, not all sectors are equally exposed. EV components, semiconductors, and agro-processing are proving resilient due to pricing power, diversified markets, or regulatory tailwinds.

1. EV Components: Thailand's Manufacturing Edge

Thailand has positioned itself as a regional EV manufacturing hub through its EV 3.5 scheme, which offers tax incentives and R&D support. This has attracted investments from global automakers like Toyota and Tesla, with AutoAlliance Thailand (a joint venture between Toyota and Mazda) leading production of EV batteries and drivetrains.

• Resilience Factors:
• Diversified Demand: EV components are less exposed to U.S. tariffs due to strong demand from ASEAN, Europe, and China.
• Cost Advantages: Thailand's skilled labor and existing automotive supply chains reduce production costs.

Investment Play: Look to companies like Advanced Info Service (ADVANC), which is expanding EV charging infrastructure, or PTT Global Chemical (PTTGC), a supplier of specialty polymers for EV batteries. Both benefit from Thailand's EV ecosystem.

2. Digital Infrastructure: A Growth Catalyst

Thailand's push to modernize its digital infrastructure—driven by 5G rollout and cloud adoption—is creating opportunities in telecoms and data centers. Advanced Info Service (ADVANC) and True Corporation (TRUE) are leading this transition, while Global Data Centers (GDC) is expanding capacity to meet regional demand.

• Resilience Factors:
• Domestic Demand: Thailand's tech-savvy population and government digitization projects ensure steady growth.
• Trade Neutrality: Digital infrastructure is less impacted by tariffs, with demand tied to local and regional tech adoption.

Investment Play: Telecom stocks offer stable dividends and exposure to structural growth. Consider overweighting ADVANC or TRUE, which trade at P/E ratios below 15x (vs. historical averages of 18x).

3. High-Value Agriculture: Beyond Tariffs

While rice exports face price pressures, Thailand's premium agricultural products—such as durian, processed seafood, and organic produce—are thriving. These sectors benefit from:
- Trade Agreements: China's “one belt, one road” initiatives boost access to its markets.
- Structural Demand: Rising affluence in Asia drives consumption of niche agro-products.

Investment Play: Thai Union Frozen Products (TUF), a global seafood supplier, and CP ALL (CPALL), which owns convenience stores selling premium goods, offer exposure to this trend.

Macro Risks and Valuation Entry Points

Despite sectoral strengths, Thailand's economy faces three key risks:
1. GDP Contraction: The IMF projects 1.8% growth in 2025, but tariffs could shrink this to 1.1%.
2. Debt Overhang: Public debt at 64% of GDP limits fiscal flexibility.
3. Currency Volatility: The baht may weaken further if the U.S. dollar strengthens, amplifying import costs.

Entry Point Strategy:
- Wait for Dip: Use tariff negotiations (targeting a 20% tariff reduction by Q4 2025) as a catalyst.
- Value Plays: Seek stocks trading below 10x P/E, such as PTTGC (9.5x) or TUF (8.2x).
- Diversification: Pair Thai equities with regional plays in Vietnam (e.g., FPT Corporation) to hedge tariff risks.

Conclusion: A Selective Play on Thai Resilience

Thailand's export decline is sector-specific, not systemic. Investors should focus on companies with global supply chain roles (EV components), digital transformation bets (telecoms), or premium agricultural products. While tariffs pose near-term risks, the valuation discounts now offer a compelling entry point for long-term growth.

The path forward requires patience—waiting for tariff resolution—and a focus on firms that can thrive irrespective of U.S. trade policies. In this environment, selective investing in Thailand's resilient sectors could yield outsized returns.

This analysis assumes U.S.-Thailand tariff negotiations conclude positively by late 2025. Monitor geopolitical developments closely.