Thailand could gain from US’ huge increase in tariffs on Chinese goods

SUNDAY, MAY 19, 2024

The decision of the United States to levy higher tariffs on imports from China could benefit some industries in Thailand and push up exports of some products, the Federation of Thai Industries (FTI) has said.

FTI chairman Kriengkrai Thiennukul was reacting to the recent announcement by the US of raising import tariffs on most goods from China to 25%, while it will be 100% for electric vehicles and 50% for semiconductors, solar cells, and syringes and needles. The new tariffs come into effect within the next three months. 

Kriengkrai said that the US decision could impact some Thai industrial sectors.

Thailand could gain from US’ huge increase in tariffs on Chinese goods

The industries that will be affected are those that make products for which Thailand has a supply chain exporting components to China. The sector that would be clearly impacted is the EV industry in China.

However, Thailand is not directly involved in supplying components to China's EV industry. Nonetheless, when it comes to internal combustion engine (ICE) vehicles, Thailand does have some involvement in supplying components to China's supply chain, he said.

The US has specified that both EV and ICE vehicles manufactured in China would be subjected to a tariff increase from 25% to 100%.

"Thailand may benefit from the trade war when the United States imposes high import tariffs on goods from China. This situation may prompt the search for alternative products, which could be to Thailand’s advantage. For instance, Thailand is the world's second-largest exporter of air-conditioning units behind China. In the new scenario there could be an increase in demand for Thai-made air-conditioners," Kriengkrai said.

The US had earlier raised tariffs on air-conditioners imported from China, which resulted in an increase in demand for air-conditioning units from Thailand. Consequently, there is ongoing monitoring into whether this trade war would lead to further tariff increases on other goods from China beyond the automotive sector, he said.

If there are additional categories affected, products from Thailand that can serve as substitutes may also see positive effects, he added.