11-07-2025
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.
