Impact of the Thailand–Cambodia Conflict on Thailand’s Trade

Written and researched by Vivid Vejanandhanurak

Co-edited by Bhumipaitoon Tungkaserawong and Cristabelle Chang

The ongoing conflict between Thailand and Cambodia in 2025 has had profound economic repercussions. Although Cambodia is not among Thailand’s largest global trading partners, the 2025 Thailand–Cambodia conflict has caused disproportionate economic damage through the disruption of cross-border trade.  The escalation into armed clashes and the complete closure of land border checkpoints have stifled trade, valued worth tens of billions of baht annually, and strained the livelihoods of multiple Thai provinces.

Pre-Conflict Trade Landscape

Prior to the conflict, Thailand and Cambodia maintained a growing and economically significant trade relationship. In 2024, bilateral trade totaled 366.7 billion baht, with Thailand responsible for about 88% of exports and 12% of imports in the relationship (International Institute for Trade and Development [ITD], 2025). Most of this trade was border trade, facilitated by several key checkpoints that enabled the regular flow of goods including consumer products, foodstuffs, fuel, vehicles, and agricultural inputs.

The border economy was integral to several Thai border provinces such as Sa Kaeo, Chanthaburi, and Trat, where cross-border commerce helped sustain small and medium enterprises (SMEs) and local labor markets (ITD, 2025). The conflict, however, has undermined this integration and created a cascade of economic costs.

Prior to the conflict, Thailand and Cambodia maintained a steadily growing trade relationship. In 2024, bilateral trade reached 366.7 billion baht, with Thailand accounting for approximately 88% of exports and 12% of imports (International Institute for Trade and Development [ITD], 2025). A large share of this exchange occurred through land border trade, facilitated by checkpoints such as Aranyaprathet, Khlong Yai, and Chanthaburi.

Unlike high-value global trade dominated by multinational firms, Thai-Cambodian border trade is typically high-frequency and low-margin, supporting local traders, logistics providers, and SMEs. Provinces such as Sa Kaeo, Chanthaburi, and Trat relied heavily on this daily cross-border commerce to sustain employment and household incomes. As a result, disruptions to border trade have effects that extend far beyond headline trade statistics.

Border Closures and Trade Interruptions

One of the most immediate effects of the conflict was the complete closure of Thai-Cambodian border crossings from June 2025, which effectively froze land trade between the two countries. According to the University of the Thai Chamber of Commerce, the closure of main checkpoints such as Aranyaprathet, Khlong Yai, and Chanthaburi has been costing Thailand an estimated 11.65 billion baht per month in lost exports alone, with annualized losses that could reach 141.84 billion baht if the closure persists (Nation Thailand, 2025). Additional losses for key export sectors — food and beverages, vehicles and parts, and chemicals — could total 66.61 billion baht, while imports worth over 20 billion baht (such as metals, cassava, and raw materials essential to industry) are also disrupted (Nation Thailand, 2025).

The complete halt of land freight has created acute logistical bottlenecks. Many Thai exporters have been forced to divert shipments through alternative routes such as sea or air transport, which are more costly and slower, reducing competitiveness and profitability. This rerouting has increased transportation costs by an estimated 25–40%, further stressing Thailand’s supply chains (BangkokOne, 2025).

Economic Damage and Broader Trade Consequences

Beyond monthly border trade losses, the economic damage attributed to the conflict includes an estimated over 10 billion baht ($307 million) in direct costs due to evacuation, property damage, and immediate disruptions (Reuters, 2025). This figure does not fully account for ongoing trade losses, which could be far larger if the conflict continues for months rather than weeks (Reuters, 2025).

The paralysis of cross-border commerce has also derailed plans for joint economic projects with Cambodia, including significant natural gas development initiatives valued at trillions of baht, which now face indefinite suspension (Nation Thailand, 2025). These setbacks illustrate how trade disruptions can spill over into broader investment and infrastructure development, eroding long-term economic prospects.

Regional Trade and Supply Chain Disruptions

The border conflict has reverberated beyond the immediate border economy. The return of hundreds of thousands of Cambodian migrant workers who had been employed in sectors like construction, agriculture, and processing in Thailand has exacerbated labor shortages and increased wage pressure (Nation Thailand, 2025). This exodus not only affects local wage structures but undermines production capacity in key sectors that traditionally relied on this labor force.

In terms of supply chains, the incapacity to deliver raw materials and intermediate goods through border routes has added complexity to regional logistics. Industries such as food processing, manufacturing, and construction now face supply disruptions, which can impede production continuity and reduce economic output. The shift to alternative, longer transport paths through Vietnam and Laos elevates costs and delivery times, which can erode Thailand’s competitiveness both regionally and internationally (BangkokOne, 2025).

Local Economies and Border Communities

The impact of trade disruptions is especially severe in six northeastern provinces of Thailand, where border trade once fueled local economies. Recent estimates suggest that the ongoing border closure has cost these border communities between 50 and 80 billion baht annually in net trade losses, depending on how long the crisis persists (Nation Thailand, 2025). These losses translate into reduced incomes for traders, logistics operators, and ancillary services such as restaurants, hotels, and retail businesses that depended on the flow of goods and people across the border.

Local businesses that once thrived on daily cross-border commerce report severe downturns in revenue and foresee long recovery periods even after the conflict ends. The downturn in border tourism — another source of local income — compounds the economic strain on these communities (ITD, 2025). Consumer confidence and business planning in these regions have been deeply shaken due to persistent uncertainty.

Investor Confidence and Long-Term Growth Prospects

The conflict has also dampened foreign investor confidence, particularly in sectors involving Thai investment in Cambodia. Thai businesses with significant operations in Cambodia — such as consumer goods, hospitality, petroleum, and agricultural services — have had to reassess their strategic plans amid rising risks and volatility (ITD, 2025). Multi-national firms often respond to increased geopolitical risk by delaying capital expenditures or relocating operations to safer markets, which can reduce foreign direct investment flows over time.

Moreover, the conflict’s impact on trade raises concerns about Thailand’s overall economic growth trajectory. Although the country’s GDP growth forecasts remain modestly positive, trade disruptions can subtract from growth momentum, especially if export declines persist and trade routing inefficiencies continue to weigh on trade balances.

Conclusion

In summary, the Thailand–Cambodia conflict has inflicted wide-ranging and deep-rooted damage on Thailand’s trade, particularly through the complete closure of border checkpoints and the paralysis of border commerce. The effects span immediate trade losses, increased logistics costs, disrupted supply chains, labor shortages, weakened local economies, dampened investor confidence, and setbacks to major joint economic projects. These outcomes demonstrate how geopolitical conflict can quickly erode decades of economic integration and cooperation between neighboring countries.

If the border closure continues for an extended period, the trade and economic damage will only deepen, potentially reducing Thailand’s GDP, undermining national competitiveness, and delaying recovery for border communities. Restoring stability and reopening trade routes remains paramount to alleviating these economic costs and revitalizing bilateral commerce.

References

BangkokOne News. (2025, December 10). Thailand-Cambodia Conflict Disrupts $5B Trade and Gas Reserves. Bangkok One News: https://bangkokone.news/thailand-cambodia-conflict-disrupts-5b-trade-and-gas-reserves/

The Nation. (2025, August 27). Thai Border Trade with Cambodia and Myanmar Plunges into Crisis. Nation Thailand: https://www.nationthailand.com/business/economy/40054624

The Nation. (2025, December 13). Border shutdown batters 6 Northeast provinces, trade losses seen soaring to 80 billion baht. Nation Thailand: https://www.nationthailand.com/business/economy/40059709

Petruang, N. (2025, July 30). The Thai-Cambodian Border Economy Amid Conflict - ITD - International Institute for Trade and Development. สถาบันระหว่างประเทศเพื่อการค้าและการพัฒนา (องค์การมหาชน): https://www.itd.or.th/en/itd-data-center/44_68_eng/

Reuters. (2025, August 29). Thailand estimates over $300 million in economic damage from border conflict with Cambodia. Investing: https://www.investing.com/news/economy-news/thailand-estimates-over-300-million-in-economic-damage-from-border-conflict-with-cambodia-4156722