New US tariff could threaten Thai exports

A new US tariff could pose a severe threat to Thai exports in the latter half of this year, causing fresh trade uncertainties, say economists and businesses.

Thai export growth in the second half of 2026 could remain flat from last year if tariffs under Section 301 of the US Trade Act go ahead next month, said Nuttaporn Triratanasirikul, deputy managing director of Kasikorn Research Center (K-Research).

Section 301 authorises the US Trade Representative (USTR) to investigate and impose retaliatory tariffs or trade restrictions on countries that engage in “unfair, unreasonable” or discriminatory policies that burden US commerce.

These practices include excess manufacturing capacity, intellectual property violations, digital services taxes, and forced or child labour.

The USTR has singled out insufficient measures to prevent forced labour as justification for the new tariff. While forced labour might not exist in a particular country, some of its products could be penalised if their supply chain includes imports from other countries where forced labour is used.

The new tariff could replace the current Section 122 tariffs that expire on July 24 for imports from 59 countries and the EU. Those rates were imposed after the US Supreme Court ruled against President Donald Trump’s “reciprocal” tariffs last year.

Fourteen countries or regions could be subject to a 10% tariff under Section 301, comprising Canada, Ecuador, El Salvador, Argentina, the EU, the UK, Bangladesh, Guatemala, Mexico, Pakistan, Indonesia, Malaysia, Cambodia and Taiwan.

Thailand would be among 46 countries subject to a 12.5% tariff, along with China, Brazil, South Korea and Switzerland.

Imports from Thailand are currently subject to a 10% tariff rate under Section 122, compared with the 19% “reciprocal” rate that the Supreme Court earlier ruled unconstitutional.

The USTR is scheduled to hold hearings on July 7 about the proposed tariffs. After the review is completed, tariff rates could be set for each country, potentially next month.

In some cases, a Section 301 tariff could be imposed on top of the base tariff for certain products, adding to the uncertainty.

“The initial phase allows the US to force affected countries to enter negotiations with it. Countries such as Thailand would likely have to sacrifice something in order to obtain favourable tariff rates,” Ms Nuttaporn told the Bangkok Post.

“If the negotiation results fail to impress the US, it might lift tariff rates for specific countries later.”

Thailand still has not reached a final agreement on trade and tariffs with Washington, while than Malaysia, Indonesia and Cambodia have all done so.

The Section 301 strategy could trigger countermeasures from severely hit countries, similar to what happened with Trump’s reciprocal tariff, she said.

Trump signalled he intends to use Section 301 to rebuild his tariff agenda after the Supreme Court ruled he exceeded his authority by using the International Emergency Economic Powers Act to impose duties without congressional approval.

After the court struck down those tariffs, Trump sought to revive them partly with the global 10% duty that would expire next month.

Ms Nuttaporn said K-Research anticipates Thai exports will weaken in the second half of the year after shipments surged by nearly 20% year-on-year in the first four months.

The think tank recently lifted its 2026 export growth forecast to 8.2% from 1%.

“Our 8.2% growth forecast is quite conservative,” she said.

“In the worst-case scenario, exports could post flat growth in the latter half of the year.”

Cost concerns

The Federation of Thai Industries (FTI) said the prospect of Section 301 tariffs has sparked fresh concerns among exporters, causing them to look for ways to deal with increasing costs.

“We believe food manufacturers will certainly be hit,” said Pimjai Leeissaranukul, the chairwoman of the FTI, adding that it remains unclear whether industries such as electronics will be affected by higher import duties following media reports of Washington’s renewed attempts to revive its tariff policy.

“Manufacturers must try their best to control costs,” said Mrs Pimjai. “Thailand also needs to look for new markets more seriously.”

She said that while the FTI is confident about the ongoing trade negotiations between Thai and US authorities, the question of whether Thailand will be affected by new tariffs also depends on Trump.

“Trump tends to threaten others. We have to watch what will happen next,” said Mrs Pimjai.

Koraphat Vorachet, assistant managing director and head of research at Krungsri Securities, played down the potential impacts from the new US tariff.

Fast-growing electronics products are exempted, while most of the tariffs apply to agricultural products, which have largely adjusted since the universal tariff measures were imposed previously before being revoked by the court, he said.

Based on initial assessments by the National Economic and Social Development Council, the impact from the US's Section 301 investigation should not be significant. Thai products likely to be affected include rice, textiles, yarn, personal protective equipment and solar cells, said Mr Koraphat.