Editor’s Note
This article highlights the looming economic threat to Thailand’s labor-intensive industries as the US prepares to decide on maintaining high tariffs. The potential consequences—lost orders, factory relocations, and long-term GDP impact—underscore the high stakes for millions of workers and the broader economy.
The Thai private sector is bracing for a US tariff verdict, with labor-intensive industries fearing a blow to their competitiveness. Millions of workers in garments, textiles, jewellery, electronics, tyres, and rubber gloves risk fallout from lost orders, factory relocations, and long-term GDP decline.
The United States is set to decide by August 1, 2025, whether to maintain a steep 36% tariff on Thai exports, posing a significant threat to Thailand’s economic competitiveness against regional rivals like Vietnam and Indonesia which have secured lower rates.
Seven key labor-intensive industries are particularly vulnerable: textiles, garments, gems and jewellery, electronics, electrical appliances, processed foods, and rubber products.
Millions of jobs are at risk, with specific sectors facing mass layoffs, including an estimated 400,000 workers in the garment industry, up to 800,000 in the jewellery sector, and 600,000 in electronics.
Industry leaders warn that if the 36% tariff is upheld, it could trigger a shift of manufacturing orders and foreign investment to competing nations, leading to a long-term decline in Thailand’s export sector.
Yuttana Silpsarnvitch, advisory board member and former president of the Thai Garment Manufacturers Association, said that he is deeply concerned about the export outlook for Thai garments in the remaining months of the year.
He noted that foreign investors already operating in Vietnam and Indonesia are expected to scale up their operations in those markets if Thailand’s tariff rates remain elevated. This would inevitably result in a decrease in orders placed with Thai manufacturers and potentially trigger an exodus of production capacity away from Thailand.
Industry representatives warn that if the 36% tariff is upheld, Thai garment exports to the US—which currently account for a substantial 38% of total garment exports—will see a sharp decline. The scale of the shortfall would be difficult to offset through alternative markets within a short timeframe.
However, he expressed cautious optimism that Thailand could still secure a lower rate.
Yuttana noted that while a 20–25% tariff would allow Thailand to remain competitive, a continuation of the current 36% rate would force many exporters to scale back operations—potentially triggering mass layoffs and a long-term contraction in export volumes.
Somchai Phornchindarak, President of the Federation of Thai Gem, Jewellery and Precious Metal Associations, has expressed concern over the potential impact of looming US tariff hikes on Thailand’s gem and jewellery sector.
He noted that export figures to the US during the first half of this year remained robust, as buyers rushed to import goods ahead of the anticipated imposition of reciprocal tariffs by Washington on August 1. Manufacturers in Thailand also accelerated shipments in response. However, the final tariff rate to be applied to Thai goods remains unclear.
Previously, Thai gems and jewellery were subject to standard Most Favoured Nation (MFN) tariffs by the US, averaging around 6–7%. This has already been increased to 10% since April, following a broader tariff adjustment by Washington affecting trade partners globally.