Knight Frank points to vulnerable sectors
Managing director Nattha Kahapana said the 36% levy, which is expected to be implemented and is scheduled to take effect on Aug 1, might intensify structural pressures already facing Thailand's economy.
"Even if Thailand attempts to negotiate for a lower rate, a win-win outcome is unlikely," he said. "Compared with Vietnam, taxed at a 20% rate, Thailand still lags in manufacturing competitiveness."
Mr Nattha warned that without clear mitigation measures, such as adjusting trade behaviour to align with global shifts, the tariff could disrupt Thailand's current account balance.
"The lack of a strategic response could also undermine Thailand's ability to attract foreign investment, particularly in the manufacturing, logistics, and industrial real estate sectors," he said.
Mr Nattha said foreign direct investment (FDI) remains a key driver of Thailand's economic development, contributing significantly to economic growth, employment, and innovation.
According to the Board of Investment, FDI hit record levels in 2024 with 1,910 projects receiving approval, up 42.7% from 1,338 projects in 2023.
The investment value surged to more than 727 billion baht, up from more than 552 billion baht in 2023, reflecting rising investor confidence.
This FDI surge was largely fuelled by Chinese investors seeking to mitigate geopolitical risks and diversify their supply chains, opting for alternative production bases in Southeast Asia.
China became the leading foreign investor in Thailand in 2023, with over 300 projects approved and the value of investments exceeding 100 billion baht, mainly in electronics, electric vehicles, and digital infrastructure.
The momentum continued in 2024, as Chinese-approved projects surpassed 700, with the value of investments reaching a new high of over 180 billion baht.
These investments align closely with Thailand's growth strategy, particularly in semiconductors and electronics, where Chinese firms are setting up export-oriented manufacturing plants.
However, these advantages come with risks. Chinese firms operating in Thailand could face increased scrutiny from the US, particularly regarding trade circumvention.
The US tightened regulations on transshipment and compliance, raising concerns that Thai exports linked to Chinese supply chains may face additional restrictions, said Mr Nattha.
Potential trade barriers may include new tariffs on Thai goods, stricter rules of origin, and heightened customs inspections on products suspected of bypassing tariffs on goods originating from China.
Compliance demands are also rising. Chinese firms using Thailand as an export base must ensure full transparency and documentation to avoid penalties.
The Thai government and local businesses must carefully navigate this evolving regulatory landscape to preserve long-term access to key markets.
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3 hours ago
- Bangkok Post
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However, she wondered which company would be responsible for her car's maintenance going forward and whether it would be difficult in the future to secure some form of compensation, given the parent company's status. WHAT HAPPENED TO THE NETA BRAND? Ms Jutamas is not the only concerned Neta owner in Thailand, as the Chinese company that entered the Thai market in 2022 has struggled to compete with BYD, a rival Chinese EV brand. As a consequence, Neta Thailand has struggled to meet the Thai government's requirements for its incentive programme aimed at boosting EV production. Under the scheme, car manufacturers were exempt from import duties in 2024, but were obliged to match import volumes with domestic production. Citing decelerating sales and tightening credit conditions, car manufacturers asked the government to adjust the scheme and the production shortfall in 2024 has since been rolled over into this year. As Neta's parent firm entered bankruptcy proceedings in China last month, according to state media, the Thai unit is unable to produce the required number of cars locally. According to Reuters, the Excise Department received a complaint filed last month by 18 Neta dealers in Thailand seeking to recover more than 200 million baht of allegedly unpaid debt. Neta's share of Thailand's EV market peaked at 12% of total sales in 2023 when the industry was growing, according to data based on industry research. BYD secured a 49% market share in 2023. In the first five months of 2025, new registrations of Neta vehicles slumped 48.5% year-on-year and its share of EV registrations dropped to just 4%, according to government data. Neta car owners took to social media in droves to share their experiences with maintenance issues and limited after-sales support. A consumer watchdog agency is investigating some of these complaints. 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The Office of the Consumer Protection Board is investigating Neta's business in Thailand after summoning Neta representatives for talks on how to prevent negative impacts for Thai consumers following a report from a state-owned news agency in China that Neta Auto Thailand's parent filed for bankruptcy. The company's financial shortcomings were brought to the court in China after a creditor sued the company over an unpaid debt of roughly 5.3 million yuan (US$730,000), amid total liabilities exceeding 10 billion yuan ($1.4 billion). Mr Sun previously told the Bangkok Post Neta would continue to manufacture and sell Neta cars in Thailand. To alleviate motorists' concerns over maintenance services and the availability of spare parts, Neta opened a new spare parts distribution centre in Nakhon Pathom in May, attempting to improve after-sales services. A shortage of some replacement parts led to delays in repairs, with some repairs taking up to 10 months. 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Bangkok Post
3 hours ago
- Bangkok Post
Govt to help make 100K inverters
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Bangkok Post
5 hours ago
- Bangkok Post
Auto parts makers brace for the worst
Thai auto parts makers are preparing for the impact of Washington's steep tariff policy, coupled with concerns over global steel price fluctuations that may affect the automotive industry. They recently discussed the issues with the Federation of Thai Industries' (FTI) Auto Parts Industry Club, highlighting how the tariffs and steel prices are two factors dealing a heavy blow to their businesses. "We are monitoring the progress of the reciprocal and auto parts tariffs," said club chairman Suphot Sukphisarn. On April 2, US President Donald Trump slapped a 25% tariff on foreign-made automobiles. Then on May 3, he issued a 25% import tax on engines, transmissions and other key vehicle parts. Thai auto parts manufacturers sell products to many countries, including the US. Last year Thailand exported motor vehicles, accessories and auto parts worth US$1.89 billion to the American market, according to Thai Customs and the Commerce Ministry. Over the first five months of this year, the value of products in this category shipped the US tallied $766 million. Local auto parts makers also sell products to other countries. If these countries assemble cars and export them to the US, the parts makers still face an indirect impact of the 25% tariff on foreign-made automobiles, according to the FTI. On July 7, Trump sent a letter to Thailand stating the US will impose a 36% reciprocal tariff on Thai imports from Aug 1. The rates did not include any sector-specific tariffs that may be imposed separately on goods imported in key industries, according to media reports. The 36% tariff could also have an indirect impact on the automotive industry. "If the tariff slows down Thai exports, it will continue to affect the country's GDP, harming the economy while the automotive industry bears the brunt," said Mr Suphot. Up to 90% of auto parts in the domestic market are supplied for pickup assembly, which is struggling to deal with sluggish sales, he said. In the steel industry, Japan's Nippon Steel finalised its acquisition of US Steel worth $14.9 billion in June after talks lasting 18 month. Some people in the industry are concerned the takeover will affect global steel prices, said Mr Suphot. If steel becomes expensive, car assembly may slow, affecting auto parts manufacturing, he said.
