Thailand may see a decline in new foreign direct investment (FDI) applications due to uncertainties over potential US tariffs.

Narit Therdsteerasukdi, secretary-general of the Board of Investment, said that the US is considering a 36% tariff, although US President Donald Trump has imposed a 90-day pause on the measure.

Narit noted that some companies, particularly those planning to export to the US, may delay their investment decisions in Thailand as a result.

“The slowdown could probably happen temporarily in the short term,” he told reporters on May 8, 2025.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Thailand’s FDI vulnerability reflects ASEAN’s shifting trade dynamics

Thailand’s potential investment slowdown highlights a broader regional pattern where ASEAN economies are increasingly caught between major powers.

Chinese manufacturing FDI in ASEAN has surged significantly in recent years, reaching $60.8 billion in 2018 and remaining strong at over $10 billion annually from 2022-2024 as companies sought to diversify supply chains away from China1.

Thailand specifically captured 18% of Chinese manufacturing FDI in ASEAN, particularly in automotive and electronics sectors, showing how the country has become an important alternative production base1.

This investment surge occurred as US-China trade tensions escalated, demonstrating how geopolitical friction reshapes regional investment patterns.

Now these same investments face new uncertainties as Thailand and other ASEAN nations navigate the threat of significant US tariffs, highlighting the precarious position of being caught between competing economic powers.

2️⃣ Trade disputes create ripple effects beyond headline numbers

The economic impact of potential US tariffs extends far beyond macroeconomic statistics, threatening millions of livelihoods across Thailand’s economy.

Analysis from Thailand’s Joint Standing Committee on Commerce, Industry and Banking reveals that the trade dispute could directly impact approximately 3.7 million workers and nearly 5,000 small and medium enterprises throughout the country2.

The cumulative export losses over the next decade could reach 1.4 trillion baht (~$43 billion), with the projected GDP growth for 2025 already revised downward to just 2.0-2.2% due to tariff uncertainties3.