Trump has declared victory in the election, securing a majority of votes in both chambers of Congress. The US stock market and the dollar responded positively, but in the near future, the US economy still faces risks from rising inflation and a slowing economy.

  • Donald Trump has won a second term as President of the United States, and the Republican Party has gained a majority in both the Senate and the House of Representatives (Republican Sweep). This outcome is likely to facilitate the passage of various policies that Trump campaigned on. After his inauguration on January 20, 2025, urgent policies expected within the first 100 days include measures to increase import tariffs, reduce corporate and household income taxes, extend the tax cuts enacted in 2017, restrict immigrant labor, and support domestic fossil fuel production, among others.
  • Following the US election results, the dollar strengthened, with the dollar index reaching a peak of 105.44 (6 PM Thai time), reflecting an increase of about 1.95% from the previous day's closing level. Additionally, the yield on 10-year US government bonds rose close to 4.50%, driven by increasing inflationary pressures, expectations of a decrease in US policy interest rates, and heightened fiscal risks. Meanwhile, the US stock market responded positively, with the Dow Jones futures rising by over 1,300 points (6 PM Thai time).
  • However, the trend of rising inflation risks in the US is increasing due to measures to raise import tariffs and restrict immigrant labor, along with a growing fiscal deficit. While measures to reduce corporate income taxes and support domestic production, as well as the potential for the US to increase trade restrictions with countries that are manufacturing bases for China, may help support investment and stimulate the US economy, it may take time to see results. In the short term, domestic demand is likely to face pressure from persistently high inflation and slowly decreasing interest rates, leading to an increased risk of stagflation in the US economy, which will depend on additional economic measures to mitigate the impact of higher import tariffs.

Overall trade restrictions and the impact of changes in the global supply chain remain a downside risk for the Thai economy and industry.

  • In the short term, Thailand may benefit from the acceleration of US imports and the import of certain goods from Thailand to replace Chinese products, including semiconductors, solar cells, rubber gloves, fruit juices, television equipment, PCA, and toys. However, going forward, Thai exports may be at risk of Trump's increased import tariffs, as Thailand has a significant trade surplus with the US, ranking 12th (in 2023) among all trading partners. This situation will need to be monitored, and the final outcome will likely depend on negotiations between Thai authorities and the US. Additionally, Thailand's exports and tourism may be affected by increasing economic pressures on China.
  • Thailand may gain some benefits from the relocation of production bases, but positive effects are not expected to materialize quickly. The results of foreign direct investment (FDI) moving to various countries will not happen immediately, and the decision to invest will depend on several conditions. Besides considerations of costs and medium-term revenue opportunities for each product in each country, it will also depend on the tax rates imposed by the US and how closely the companies are associated with Chinese supply chains.
  • FDI in the automotive and electronics sectors may increase in Thailand and several other ASEAN countries (as well as Mexico, India, and Eastern Europe). However, BEV vehicles that are starting to be invested in and produced in Thailand, primarily by Chinese manufacturers, may face challenges in exporting to the US (including the EU), and exports to other markets like ASEAN will likely face increased competition. Additionally, Thailand's electronics exports to the US may also be at risk of being taxed, similar to solar panel cases, not to mention that Thailand still faces limited readiness (clean energy, skilled labor, etc.) for technological changes towards the demand for more complex smart chips like AI and GenAI.
  • Thai manufacturers in the chemicals, construction materials (steel), textiles, and clothing sectors are likely to face competition from imports and/or increased investment from China, due to China's production exceeding domestic demand. Coupled with tariff barriers from Western countries, China will need to find export markets to offload products and sustain business operations, which will further increase competition for Thai products in both domestic and export markets.