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

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 caron-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 the 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 shipment 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 the at exports will contract by 4% in the latter half of the year.

Key sectors expected to be affected include automotive and parts, electrical appliances and processed food.

In addition, products within the global supply chain bound for the US — such as rubber, auto parts, steel and chemicals — will also likely be impacted, accounting for around 4.3% of Thailand's exports.

For example, rubber exports, a key component of US-bound tyres, face heightened risks due to potential 900% tariffs on transshipped goods, as noted in recent trade discussions.

Thai small and medium-sized enterprises (SMEs), especially those involved in export and manufacturing such as processed seafood and auto components, are also expected to be significantly affected by the tariffs.

According to the UOB Business Outlook Study 2025, business sentiment has already declined, dropping from 58% in 2025 to 52% following the US tariff announcements, with small enterprises expressing greater concern about the potential impact.

Rising operating costs and inflation are top concerns, with 60% of businesses anticipating cost pressures and 57% expecting higher inflation in Thailand.

Compounding this challenge, many local SMEs face structural problems and declining competitiveness. Three in five businesses — led by medium sized enterprises — have implemented cost-saving measures to manage rising expenses, according to UOB's findings.

Thai SMEs face several structural problems that limit their competitiveness and long-term growth. For example, these include low productivity and outdated technology.

Many local SMEs rely on labour-intensive production, while digital adoption, automation and innovation remain low compared to regional peers.

At the same time, large SMEs do not pay attention to R&D, investing minimally in such product development. Therefore, SME operations depend on low-cost production rather than value-added or branded goods. Additionally, their workforce often lacks advanced skills for digital transformation.

The government has proposed increasing imports of US goods to balance trade — including agricultural products, liquefied natural gas and Boeing aircraft. It has also indicated plans to expand investment in the US, such as participation in energy products like the Alaska gas initiative. 

At the same time, many SMEs are adapting by seeking new markets beyond the US and diversifying product lines — for instance, shifting from food exports for human consumption to pet food.

UOB Thailand also sees the transition towards sustainability as a key strategy of Thai businesses, including SMEs, to navigate the challenges posed by the US tariffs.

The UOB Business Outlook Study 2025 highlights that 60% of businesses now view sustainability as important, with the tariff shock accelerating urgency across sectors. This signals a broader shift in business priorities towards resilience in a complex global market.

Based on insights from UOB's study, more than 90% of the bank's business clients consider sustainability important, yet only 53% have implemented related practices, with medium enterprises trailing. 

However, more than 60% indicated plans to take action in the post-tariff period.

Nearly 40% have fully integrated digital tools, and 68% expected faster digitalisation adoption. About 30% of businesses are exploring renewable energy and advisory services to support their sustainability transition, though high costs remain a barrier.

Key obstacles remain, including infrastructure gaps, high implementation costs and customer reluctance to pay a premium for sustainable products.

Many Thai businesses have strong potential to transition to low-carbon, sustainable models and adopt higher value-added services — particularly within the tourism sector.

Tourism, one of the country's core economic drivers, can pivot towards wellness-oriented and premium service offerings to enhance competitiveness amid US tariff disruptions. 

UOB Thailand stands ready to support businesses on this journey through sustainable financial solutions, helping them build resilience and capture opportunities in a changing global economy.

Source: Bangkok Post

• US tariff threats over forced labour 'unjustified', Commission says
• US Section 301 Forced Labor Investigation: New Trade Compliance Risks for Viet Nam Exporters
• US cites forced labor concerns as grounds for new tariffs
• Aquatic products face challenge of maintaining market share in US
• Viet Nam extends anti-dumping duties on some Thai sugar products to 2031