Thailand's export sector is facing a pivotal moment in 2025 as mounting pressures from the global trade environment, particularly the ongoing US-China trade tensions and the repercussions of new tariff policies, begin to weigh heavily on its performance. According to the Export-Import Bank of Thailand (EXIM BANK), the third quarter of 2025 is poised to show a significant slowdown in Thai exports, signaling a critical turning point for the nation's trade-dependent economy.
EXIM BANK's latest Export Leading Index (EXIM Index) for the second quarter of 2025 stands at 100.5, marking the lowest level in six quarters and a decline from 102.5 in the first quarter. This index reflects the expectation of a notable contraction in exports during the third quarter, driven by four key dimensions: the economic slowdown of major trading partners, persistent sluggishness in Thailand's manufacturing sector, downward pressure on export prices, and fragile global consumer confidence.
Central to these challenges is the ongoing trade war ignited by the United States under President Donald Trump, who early in 2025 implemented aggressive tariff policies aimed at addressing trade imbalances. Thailand, ranking as the 11th largest country with a trade surplus against the US, finds itself directly impacted. While the US temporarily suspended the imposition of higher tariffs for 90 days starting in early April 2025, this truce is set to expire on July 9, 2025, leaving Thai exporters in a state of uncertainty.
This uncertainty has complicated pricing strategies for Thai exporters, especially given the prevalence of advance orders that require price commitments well before shipment. Furthermore, the Thai Baht's appreciation amid this volatile trade environment has intensified price competition against other exporting nations. The Ministry of Commerce acknowledges these difficulties, noting that the hoped-for export growth of 2-3% for 2025 may prove elusive.
Despite these headwinds, Thai exports showed robust growth in the first four months of 2025, with year-on-year increases of 13.6% in January, 14% in February, 17.8% in March, and 10.2% in April. However, the April figures also revealed a 13.3% month-on-month contraction, signaling a deceleration as major importers front-loaded purchases ahead of anticipated US tariff hikes. This front-loading effect is particularly pronounced in exports to the US and China, with the latter importing raw materials and intermediate goods to sustain its supply chain for exports to the US.
Minister of Commerce Phichai Naripthaphan emphasizes that while accelerated imports before tariff enforcement partly explain the early-year export surge, Thailand's export fundamentals remain solid, bolstered by expanding market reach. He projects that even if monthly exports stagnate for the remainder of the year, Thailand could still achieve over 4% export growth for 2025, surpassing official targets.
Thailand's trade surplus with the US has been steadily increasing over the past five years, with export values to the US reaching nearly $55 billion in 2024 and a surplus of $35.4 billion. This persistent surplus underscores the deep trade ties between the two countries but also heightens the risk of retaliatory tariffs if negotiations falter.
On the manufacturing front, Thailand's industrial production remains subdued. The Manufacturing Production Index (MPI) contracted for five consecutive months as of March 2025, with capacity utilization hovering below 60% for eight straight months. This sluggishness is partly attributed to intensified competition from Chinese goods and the decline of the automotive sector, which faces disruption from the rise of electric vehicles while Thai production remains focused on traditional combustion engines.
Logistics challenges further complicate the export landscape. Shipping costs, especially on the China-US route, surged by 150% in mid-May 2025 due to increased container demand following the temporary tariff truce. Additionally, the US plans to impose new port fees on Chinese-built or flagged vessels in October 2025, potentially raising costs for Thai exporters reliant on these shipping routes. Time constraints loom as exporters rush to ship goods before the July 9 tariff deadline, after which a 36% tariff could be imposed on Thai products—higher than the 30% tariff currently levied on China.
Price pressures are also mounting. Global oil prices fell below $70 per barrel for the first time in nearly four years, influenced by a slowing global economy and increased OPEC production. Agricultural commodity prices have similarly declined, driven by oversupply and renewed exports from key producers like India. The Thai rice export sector exemplifies these challenges, with 2025 projected to see rice export values plunge by 41.6% to $3.76 billion—the lowest in four years—due to a 25% price drop and a 22.2% volume decrease.
India's resumption of white rice exports after a two-year hiatus has intensified competition, driving global rice prices down by over 23% since late 2024. Major Thai rice importers such as Indonesia, Japan, Cameroon, and Malaysia are expected to reduce their rice imports significantly in 2025, exacerbating the pressure on Thailand's rice market. Thai white rice exports are particularly hard hit, with values forecast to shrink by nearly 60%, as competitors like Pakistan, Myanmar, and India gain market share, especially in Indonesia.
Amid these headwinds, Thailand's processed food sector offers a glimmer of resilience. The Trade Policy and Strategy Office reports that in 2024, Thailand's exports of agricultural industrial food products reached $23 billion, growing 4.1% from the previous year. Top exports include canned seafood, animal feed, rice and ready-to-eat foods, sugar, and canned fruits, which together constitute over 60% of the sector's exports.
Dr. Ong-art Kittikhunchai, newly elected president of the Thai Food Processors’ Association (TFPA), highlights the sector's steady growth, driven by essential consumer demand and a recovering domestic market buoyed by tourism reopening. While global consumption and purchasing power remain volatile due to trade uncertainties, the food industry has been less affected than others by US tariff policies.
TFPA's strategy focuses on diversifying markets beyond the US, targeting populous countries like India, Indonesia, Bangladesh, and regions such as Latin America as safeguards against future trade disruptions. Dr. Ong-art stresses the need for skilled negotiators who can balance national interests and ensure Thai exporters are not disadvantaged in trade talks.
He also points out the pressing need for innovation in Thai export products. Many agricultural exports remain traditional—bulk commodities like rice, cassava, and animal feed corn—sold seasonally and without significant processing or value addition. This approach leads to recurring price drops when supply exceeds demand. Dr. Ong-art advocates for government support in demand-supply management and a shift away from price guarantees or subsidies that dampen producer competitiveness.
Looking ahead, TFPA plans to enhance collaboration with government agencies, educational institutions, logistics, and energy sectors to strengthen the food industry's efficiency and market reach. With Thailand's overall economic growth projected below 3% in 2025, and limited impact from current stimulus measures, the agricultural and food sectors stand as vital engines for economic stability and growth, leveraging both offline and online channels to reach consumers.
As the July 9 tariff deadline approaches, all eyes remain on the outcome of Thai-US negotiations. Should the US maintain or increase tariffs, Thai exporters may face a challenging fourth quarter, with slowed growth and intensified competition. However, if Thailand can secure favorable terms or capitalize on its relative tariff advantage compared to competitors, there may be opportunities to sustain export momentum.
In this complex landscape, Thai exporters are urged to adopt proactive strategies: maintaining close communication with trading partners, utilizing risk management tools like currency hedging and export insurance, exploring new markets to diversify risk, and staying informed to adapt swiftly to evolving trade policies.
EXIM BANK has responded with comprehensive support measures, including advisory services through Export Clinics, financial assistance to ease liquidity constraints, and tools to manage risks. These efforts aim to help Thai businesses navigate the turbulent trade environment and lay the groundwork for sustainable growth beyond the immediate crisis.
Ultimately, Thailand's export sector stands at a crossroads, challenged by external shocks yet buoyed by resilient industries and strategic adaptation. The coming months will be critical in determining whether the country can weather the storm and chart a course toward renewed growth and stability in the global marketplace.
