Tariffs shift Thai business priorities

A wide range of Thai industries face significant challenges from US tariffs, with prolonged economic impacts unfolding gradually.

- By Sathit Talaengsatya, economist at UOB Thailand

‘The urgency for Thai businesses to act is heightened by immediate trade headwinds and by shifting global policy trends.

These include the European Union's tightening of sustainable supply chain regulations under the Corporate Sustainability Due Diligence Directive, which mandates human rights and environmental due diligence, and the Carbon Border Adjustment Mechanism, which taxes carbon-intensive imports.

These measures will increasingly shape market access, making early adoption of sustainability a strategic necessity rather than a future option.

According to the Bank of Thailand’s assessment, US tariffs will reshape global trade, with Thailand’s economy facing gradual impacts through multiple channels.

The heightened uncertainty surrounding US tariffs on Thai exports is anticipated to negatively affect the country’s exports, private investment and domestic consumption in the second half of 2025 and throughout 2026.

The central bank projects that Thailand's GDP growth will fall below 2% over the next 18 months, compared with 2.5% in 2024.

The export sector will be among the most affected, especially direct shipments to the US.

Thailand has long depended on the US market, with exports to the US accounting for around 18% of total exports and 2.2% of GDP. For context, US-bound exports grew by 3% annually from 2020 to 2024, highlighting their significance.

The impact of the US tariffs is expected to become more evident in the second half of 2025, potentially prompting a surge in export activity during the second quarter as businesses rush to ship goods before stricter tariffs apply.

As a result, the central bank projects that exports will contract by 4% in the latter half of the year.