Thai Export Momentum Faces Tariff Crossroads: Seizing Near-Term Gains Amid Second-Half Uncertainties

Thailand’s April export growth of 10.2% year-on-year—driven by surging electronics and automotive shipments—paints a bullish picture for the first half of 2025. Yet, lurking beneath the surface are tariff risks that could upend this momentum by mid-year. For investors, the challenge is clear: capitalize on current sectoral tailwinds while hedging against the looming threat of U.S. tariffs set to expire in July.

Near-Term Opportunities: Riding the Electronics and Auto Waves

The April data highlights two sectors ripe for investment:
1. Electronics: Exports of computers and components jumped 75% YoY, fueled by global demand for semiconductors and smart devices.
2. Automotive: U.S. auto exports surged 23.8% YoY, with Thai manufacturers like Hana Microelectronics and Thai Auto Group benefiting from strong American demand.

This near-term momentum is supported by pre-tariff stockpiling by U.S. buyers and Thailand’s cost-competitive manufacturing ecosystem. Investors should prioritize companies with exposure to these sectors, particularly those exporting to markets beyond the U.S. to mitigate tariff risks.

Second-Half Headwinds: The Tariff Sword of Damocles

The U.S. Section 301 tariff moratorium, currently at 10%, expires in July. If renegotiations fail, a 36% tariff could hit Thai exports, with $32 billion in annual trade at risk. Key sectors under threat:

Sector	Export Value at Risk (USD bn)	Tariff Impact Estimate
Electronics	12.1	-18% growth
Automotive	6.4	-12% growth
Agricultural	3.7	-25% growth

A worst-case scenario could slash Thailand’s 2025 GDP growth to as low as 1.3%, per the state planning agency. However, the Commerce Minister remains bullish, forecasting 4% export growth even in a tariff-hit scenario, citing market diversification efforts.

Sector-Specific Investment Strategies

1. Electronics: Play the Short Game, Hedge the Long Game

• Buy: Companies like Hana Microelectronics (export-heavy in semiconductors) and Supalai Technology (consumer electronics).
• Hedge: Use put options on Thai electronics ETFs (e.g., THDTECH) to protect against tariff-driven corrections.

2. Automotive: Focus on Diversification and U.S. Exposure

• Overweight: Thai Auto Group, which has 20% of U.S. exports redirected to Mexico via partnerships to circumvent tariffs.
• Avoid: Pure-play U.S.-exposed firms lacking alternative markets.

3. Agriculture: Wait for the Bottom, Then Pivot to Agro-Industrials

• Avoid: Direct rice exports (down 37% YoY) due to global oversupply.
• Consider: Thai Union Frozen Foods (pet food exports up 14.4%) or CP Ingredients (agro-processing), which benefit from value-added products.

4. Defensive Plays: Logistics and Diversification Plays

• Invest in: Thai Logistics Solutions (TLS), which handles 30% of Thai-U.S. cargo, benefiting from pre-tariff shipping spikes.
• Track: TSE Index (Thailand’s trade-sensitive ETF), which correlates with export growth trends.

Conclusion: Act Now, Prepare for the Storm

Thailand’s export machine is firing on all cylinders for now, but the second half demands caution. Investors should:
1. Deploy capital now into electronics and automotive plays while U.S. demand is strong.
2. Hedge with derivatives or diversify into non-U.S. markets (e.g., China, EU) to survive the tariff storm.
3. Avoid agriculture until structural issues like global oversupply are resolved.

The next three months will test Thailand’s ability to navigate trade policy cliffs. For those willing to balance risk and reward, the rewards of this Southeast Asian export powerhouse remain within reach—if acted on swiftly.