THAILAND BUSINESS NEWS
The business community in Thailand is currently facing a serious double challenge. A border conflict with Cambodia and the threat of new US tariffs have created a tough situation that could change the country’s economy in big ways. Business leaders across industries need to pay close attention.
The Border Conflict
On July 24, 2025, a five-day clash broke out along the Thai-Cambodian border. It left 32 people dead and forced more than 200,000 civilians to flee their homes. A ceasefire was reached on July 28 with Malaysia’s help but many fear the truce may not last.
Finance Minister Pichai Chunhavajira estimated the damage so far at 10 billion baht. However, the real cost is likely much higher. The government has set aside 25 billion baht in relief funds, showing how serious the disruption is—not just in terms of destroyed buildings or property, but also its wider impact on the economy.
The fighting hit Sa Kaeo and Trat provinces, where key border crossings are located. These trade routes are critical for billions of baht in annual commerce and support thousands of businesses on both sides. With them now disrupted, the economic shock is being felt immediately.
Calculating the True Cost
Associate Professor Dr. Aat Pisanwanich’s research paints a worrying picture for Thai businesses. He warns there’s an 80% chance the conflict could flare up again, mainly because of disagreements over border maps. Thailand uses a 1:50,000 scale, while Cambodia uses 1:200,000 — creating confusion about where the exact boundary lies.
The longer the conflict lasts, the bigger the economic losses:
- 1 month of fighting → 60.6 billion baht in damages to both economies
- 2 months → losses double to 121.1 billion baht
- 3 months → damage could soar to 181.7 billion baht
For border businesses, these numbers are very real. According to Sorathep Rojpotjanaruch, chairman of the Restaurant Business Association, just three months of disruption could wipe out 40-50 billion baht in exports.
If the conflict drags on for six to ten months, losses could run into the hundreds of billions. Worse, Cambodia may start relying on Vietnam, Laos, or China for supplies, causing Thailand to lose its export market permanently.
The Labor Crisis
The manufacturing sector is also facing a serious labor concern. More than 250,000 Cambodian workers are currently employed in industries like frozen food, poultry, and seafood processing. These sectors already struggle with worker shortages.
So far, most workers have stayed despite the conflict. But if tensions drag on, many could leave. Losing this many skilled workers wouldn’t just slow things down but it could also threaten the survival of entire businesses.
The impact would ripple through supply chains, disrupting production, exports, and contracts worldwide.
Tourism Under Pressure
The tourism industry, which is still recovering from recent global setbacks, is facing another challenge. The Thai Travel Agents Association warns of several possible outcomes.
- If the conflict ends within a month, Thailand could still meet its target of 34.5 to 35 million foreign visitors this year.
- If it lasts three months, arrivals could drop to 33 to 34 million.
This comes at a bad time. Chinese visitors are already down 40%, and Q2 tourist arrivals fell 12% year-on-year. A six-month crisis would hit next year’s peak winter season, when European and American travellers usually visit in large numbers.
For hotels, restaurants, tour operators, and the many small businesses that rely on tourism, this could mean major revenue losses, making it urgent to prepare backup plans now.
The US Tariff Threat
Another danger looms: the US tariff deadline on August 1. If no trade deal is reached, Thailand could face tariffs of 36% on exports to the US—one of the highest rates in the world, and far above the 19-20% tariffs given to competitors like Indonesia, Vietnam, and the Philippines.
Making things harder, US President Donald Trump has tied trade talks to the border conflict, saying he won’t return to the “trading table” until the fighting stops.
The stakes are huge. Thailand exports about $300 billion worth of goods each year, with the US making up 18% of that total, one of the largest shares in ASEAN. In the first half of 2025, exports to the US jumped 41.9%, as American buyers rushed to stock up before tariffs hit.
Losing Ground in Global Competition
Thailand has a strong and diverse portfolio (cars, auto parts, farm products, processed foods, and electrical appliances). But it has fallen behind in electronics, which is now the fastest-growing sector worldwide.
Dr. Kirida Bhaopichitr from the Thailand Development Research Institute highlights another problem. China is Thailand’s direct competitor in 18 out of its top 20 exports to the US. With China’s final tariff rate set to be announced on August 11, Thai businesses face a range of possible competitive challenges.
The economic outlook is worrying.
- If tariffs are set at 10-20%, Thailand’s GDP growth may fall below 2%.
- If the full 36% tariff is imposed, growth could drop below 1%.
This comes at a bad time, since Thailand’s household debt is already 88% of GDP, limiting the ability of local consumers to spend and make up for lost exports.
Government Response
The Thai government has rolled out several relief programs to help affected businesses. State-owned banks are offering loan repayment breaks, low-interest loans, refinancing options, and fee waivers.
On the tax side, filing and payment deadlines have been extended to September, and businesses can claim deductions for repair costs, up to 100,000 baht for homes and 30,000 baht for vehicles.
Each affected province has also received an initial 100 million baht to deal with local needs, with more funds available if necessary. Still, business owners should understand that while these measures help, they won’t fully cover the long-term damage from extended conflict or steep US tariffs.
What Thai Businesses Must Do
Facing these two crises, Thai businesses need a clear strategy for the short, medium, and long term.
- Short term → Assess risks now. Check how exposed you are to the border conflict and possible tariffs. Look at supply chain weak points, dependence on Cambodian workers, and your cash flow under different scenarios.
- Medium term → Diversify. Don’t rely too much on a single export market. Explore new destinations for your goods, build backup supply chains, and invest in technology to boost productivity. Companies heavily tied to the US market should prepare contingency plans for different tariff outcomes.
- Long term → Move up the value chain. Thailand needs to strengthen its presence in electronic and high-tech manufacturing. Innovation and R&D are no longer optional; they are key to survival. At the same time, meeting ESG (environmental, social, and governance) standards is becoming critical. Many global buyers now require sustainability, so adopting these practices is essential to stay competitive.
The Political Dimension
The Kingdom’s crisis response is complicated by political instability. Prime Minister Paetongtarn Shinawatra was suspended on July 1, leaving Acting Prime Minister Phumtham Wechayachai in charge of trade talks. But Thailand’s 20-year history of political turbulence raises doubts about whether consistent, long-term policies can be carried out.
This uncertainty shakes business confidence and investment decisions. Companies must factor political risk into their plans, knowing that even if today’s problems are solved, tomorrow’s policies may change.
Rising Nationalism
Beyond trade and economics, national sentiment could bring new risks. Rungphech Chitanuvat of Informa Markets warns that growing Cambodian nationalism may push consumers to avoid Thai products—a kind of “soft boycott.”
While harder to measure, this could still hit Thai brands and sales in Cambodia in ways that go beyond government action.
Looking Ahead
Thai businesses now face challenges unlike any in recent history. The border conflict threatens immediate damage to trade, labor, and tourism while the US tariff threat puts long-term pressure on Thailand’s export-driven economy.
The government’s support measures help but they won’t be enough on their own. Each business must chart its own survival path, and those that treat these crises as opportunities to modernise and transform will be better prepared for the future.
As negotiations unfold and the situation shifts, staying informed and flexible is important. The outcomes of both the border conflict and trade talks will shape Thailand’s economy for years to come.
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