Leo Watanabe
2024年11月26日
The second term of Donald Trump´s administration as the United States President is expected to have a significant impact on Foreign Direct Investment (FDI) both negatively and positively.
The United States has consistently been in the top 5 investors to Thailand in recent years with a peak at USD 15.6 billion inflows in 2021. Thailand has seen a shift in its FDI inflows to now target the tech sector demonstrated by the recent conclusion of a USD 1 billion investment deal from Google to construct a cloud data center in Thailand.
Trade Policies and Their Impact
During Trump's campaign, the President-elect has proposed trade policies including a 10-20% blanket tariff on imports from countries with trade surpluses with the U.S. This would impact Thailand which currently holds a USD 32.8 billion trade surplus with the US and could lead to increased trade barriers and reduced exports. On the other hand, Thailand may benefit from a far more hawkish stance of President-elect Trump on China, who has proposed blanket tariffs of 60% on products imported from China. This anti-China policy may lead to the diversification of production bases in China towards other ASEAN nations such as Thailand.
Economic experts suggest that significant tariff hikes might not materialize until late 2025, allowing time for countries like Thailand to adapt their strategies.
Opportunities Amidst Challenges
Despite the potential challenges through higher export costs to the US, a second Trump presidency could create opportunities for Thailand to attract investment in high-tech industries. The country could position itself as an alternative production base for companies seeking to mitigate the impact of U.S. trade barriers, particularly in sectors such as electronics and electric vehicles. Thailand already enjoys its place in ASEAN as a major automobile manufacturing hub and several major manufacturers have already agreed on major investments to produce electric vehicles locally.
The China Plus One Effect
The "China Plus One" strategy, which involves companies diversifying their investments beyond China, could significantly benefit Thailand during a second Trump term. As U.S.-China trade tensions are expected to escalate as they did during the first Trump term, more Chinese companies may look to establish operations in Thailand.
Thailand has already emerged as a key actor for Chinese EV automakers expanding their activities and dominance in the region. Thailand´s automotive production capabilities combined with its strategic location, labor skills, and infrastructure as well as its commitment to transitioning 30% of its auto production to EVs by 2030 have attracted significant Chinese investment. For instance, Chinese EV manufacturers like BYD and Great Wall Motor have invested at least USD 1.44 billion in new facilities in Thailand recently.
Adapting to the New Landscape
To navigate the potential challenges of a second Trump term, Thailand is expected to focus on:
Diversifying export markets to reduce reliance on the U.S. and China
Strengthening its domestic market to decrease dependence on exports
Expediting trade negotiations with both the U.S. and other countries
Positioning itself as an attractive alternative for companies seeking to relocate production from China
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