Recent developments in US trade policy have sent ripples through Thailand’s industry, as the United States has enforced stricter trade requirements on Thai goods, raising serious concerns among manufacturers and exporters. The changes include a revised tariff regime and stringent local content rules that are challenging Thailand’s export competitiveness and industrial landscape.

In July 2025, the US announced a 36% tariff on Thai imports, effective from August 2025, as part of a broader effort to address trade imbalances. Although this rate was later adjusted to 19%, this tariff still represents a significant cost burden on Thai exporters, who fear losing access and price competitiveness in the important US market.

More critically, the US is demanding that at least 60% of a product’s value must originate within Thailand for it to qualify for the standard tariff rate. Products falling short of this local content requirement face the risk of a steep 40% tariff. This measure aims to curb transshipment — products made elsewhere routed via Thailand to avoid tariffs — but it poses a major challenge for many Thai industries that rely on international supply chains.

Thai government officials, including Deputy Prime Minister and Finance Minister Pichai Chunhavajira, have voiced concerns about the impact of such high local content thresholds. Industry leaders warn that a 50–60% requirement could severely affect sectors such as electronics, automotive, textiles, and food processing, where parts and raw materials often cross multiple borders before final assembly.

The Thai Chamber of Commerce chairman, Poj Aramwattananont, highlighted that such conditions could threaten thousands of jobs and slow investment, especially in small and medium-sized enterprises (SMEs) that are integral to Thailand’s export economy. Thai manufacturers are also worried about losing market share to regional competitors like Vietnam and Malaysia, countries that enjoy lower US tariffs.

Faced with these challenges, Thailand is seeking to renegotiate terms with the US to find a balance between protecting domestic industries and maintaining strategic trade ties. The government has proposed lowering local content requirements to around 40% and is working on opening Thai markets to more American goods as part of trade talks aiming to avoid further tariff escalation and economic disruption.

Meanwhile, analysts caution that failure to reach a favorable agreement could lead to contraction in GDP growth, reduced exports, and a decline in foreign investment. Some industries are already exploring diversification strategies, including pivoting exports toward ASEAN countries and China, to mitigate reliance on the US market. This ongoing trade tension underscores the complex dynamics of global trade, where national interests, supply chain realities, and economic strategies intersect. For Thailand, balancing US trade demands while fostering industrial growth and protecting local businesses remains a pressing priority as negotiations continue.

Disclaimer: This image is taken from Reuters.