A recent trade agreement between the United States and Vietnam, announced on 2 July 2025, has significant implications for Thailand’s economy and stock market, according to a new report from INVX Research (InnovestX Securities).
The deal, which imposes US import tariffs on Vietnamese goods at 20% (and 40% on “transshipment”) while Vietnam agrees to no import tariffs from the US, suggests a potential precedent for Thailand’s upcoming trade negotiations with Washington.
INVX believes Thailand holds less strategic importance to the US compared to Vietnam, making it plausible that the Kingdom could face similar or even higher export tariffs. The research outlines three critical scenarios for Thailand, each with distinct economic and market impacts, offering investors a clearer picture of potential outcomes.
The Three Key Scenarios for Thailand’s Trade Future
- Worst Case Scenario (30% Probability): Significant Economic Contraction
- INVX assigns a 30% probability to this outcome, where Thailand faces US export tariffs ranging from 25% to 37%.
- Under this severe scenario, Thailand’s Gross Domestic Product (GDP) is projected to contract, potentially falling between -1.1% and +0.5% for the year. This would signal a drastic economic slowdown, with exports expected to decline by over 10% in the second half of 2025.
- The benchmark SET Index could drop below the 1,000-point mark.
- Further detailed analysis indicates that if tariffs hit 28%, GDP could be 0.0%, and at 36%, GDP could fall to -1.1%. The SET target, based on a PER band of 12–14x, could range from 982–1,146 at 25% tariffs, down to 826–963 at 36% tariffs.
- Base Case Scenario (60% Probability): Moderate Slowdown, SET Holds Above 1,000
- This is considered the most likely outcome, with a 60% probability.
- INVX expects Thailand to face export tariffs between 15% and 20% if negotiations yield partial success.
- Despite this, Thailand’s GDP is forecast to grow by 1.1% to 1.4%. While still indicating a clear economic slowdown, the market is perceived to have largely factored this scenario into current valuations.
- The SET Index is anticipated to remain above 1,000 points.
- Specifically, if tariffs are 15%, GDP is projected at 1.4%; at 20%, GDP is at 1.1%. The SET target for these tariff levels would be 1,032–1,204 (at 15%) and 1,007–1,175 (at 20%).
- Best Case Scenario (10% Probability): Reaching Government Growth Targets
- With a 10% probability, this is the most optimistic scenario for the Thai economy.
- It assumes Thailand successfully negotiates a lower export tariff of 10%.
- Under this condition, Thailand’s GDP is projected to grow by 1.7%, closely aligning with the government’s economic targets.
- The SET Index has the potential to rebound and reach 1,200 points once again.
Broader Implications and Investment Strategy
The immediate outlook for the SET Index is one of sideways trading as the market awaits concrete conclusions from the ongoing trade negotiations with the US. Given Vietnam’s higher strategic importance to the US, the possibility of Thailand facing a 20% export tariff (which is higher than INVX’s base case of 15%) remains a key risk to monitor closely.
For investors, INVX offers a dual strategy:
- For Low-Risk Investors: The recommendation is to accumulate defensive stocks known for low volatility and resilience against external risks, as well as consistent dividend payouts. Suggested stocks include ADVANC, DIF, and BCH. Additionally, undervalued stocks with strong financial positions and stable dividends (PER, PBV < -1SD) are advised, with BDMS, BBL, and TIDLOR highlighted.
- For High-Risk Investors: Those willing to take on more risk and aiming to capitalize on a potential quick market recovery—should the trade deal prove favorable for Thailand (i.e., tariffs are as expected or lower than Vietnam’s)—are advised to consider AMATA, GPSC, and WHA.
It is important to note that if Thailand were to reciprocate by eliminating import tariffs on US goods, certain sectors like agriculture and automotive & parts would face significant negative impacts due to increased competition from lower-cost US products, given current high tariffs in these sectors. Conversely, machinery, energy & petrochemicals, and consumer goods sectors could see benefits from access to modern technology, reduced raw material costs, and cheaper goods for consumers, respectively.
