Thailand’s manufacturing sector is facing mounting challenges due to US tariff regulations on Thai imports, despite a significant rate cut in early August. In August, the US reduced tariffs on Thai products from 36% to 19%, but concerns remain over potential higher rates on certain goods deemed to be transshipped—shipped to Thailand and then re-exported to the US.
As negotiations continue, Thailand is expected to increase its regional value content (RVC) to around 50%, aiming to prevent the US from imposing a 40% tariff on transshipped products. RVC reflects the proportion of a product’s value originating from a specific region, helping to curb origin fraud and the re-export of Chinese goods as Thai products.
According to the Federation of Thai Industries, some sectors, including electronics, steel, and pharmaceuticals, currently have low RVC levels—22.5%, 30%, and 35% respectively—below the targeted threshold. Industries with higher local content include plywood (85%), food and beverages (75%), and automotive components (66.6%).
Kriengkrai Thiennukul emphasized the importance for Thai businesses to comply with RVC rules to maintain competitiveness, especially as the stricter US tariffs are believed to target Chinese manufacturers attempting to bypass tariffs through transshipment.
US tariffs on solar panels, primarily from Cambodia, Thailand, Malaysia, and Vietnam, are believed to aim at Chinese firms exporting via Southeast Asia, with concerns over solar products being rebranded and re-exported by Chinese companies.
However, the export of electric vehicles (EVs) from Thailand is less at risk, as many Chinese EV manufacturers committed to sourcing up to 90% of components locally. Examples include Changan Automobile and GWM, which plan to ramp up local sourcing significantly as part of Thailand’s push to establish itself as an EV export hub.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) warns that export slowdown in the last quarter—already affected by global trade uncertainties and a strong baht—must not be worsened by the RVC issue. A sluggish global economy and declining tourism are likely to dent export competitiveness, with Thailand’s GDP growth forecasted between 1.8-2.2%, export growth of 2-3%, and inflation at 0.5-1%.