Analysts say Thailand may not actually suffer 890 billion baht in damages from the US’s 36% tariff hike, as Thailand is a transit point for Chinese goods to the US.

The US raising import tariffs on Thai goods by 36% in April 2025, citing the main reasons that the US has a trade deficit with Thailand and Thailand is a transit point for Chinese goods to the US. (China transshipment or Nominee Chinese goods), is appropriate or not? It must be analyzed from several perspectives as follows

Why did the US impose a 36% tariff on Thailand?

1. Trade deficit problem
   – The United States has a trade deficit with Thailand of more than $30 billion per year (2024 data), importing more Thai goods than exporting them.
   – The main products that the United States imports from Thailand are electronics (computer parts), automobiles, and agricultural products, some of which may compete with industries in the United States.
   – Tariff increases could be a tool to reduce imports and stimulate domestic production.
   
2. Thailand is a transit route for Chinese goods (China Transshipment)
   Some Chinese companies are reportedly using Thailand as a production base or changing labels (Nominee/Re-export) to avoid tariffs from the US-China trade war.

The $890 billion in damages from Trump’s tariffs may not be the right number

It is well known that Thailand has been affected by the economy, causing a large number of Chinese products to flood into Thailand, which has already caused a large number of Thai SME businesses to collapse due to this impact. It can be observed that all the famous trading applications in Thailand are all from China.

In addition, the manufacturing industry in Thailand is currently dominated by Chinese investors who invest or use nominees in Thailand in large numbers, and there is a tendency for it to grow higher.
Or even the government industry, it can be seen that there is a large amount of Chinese capital involved, as can be seen from the latest news.

Example : In the case of Chinese capital investing in the government sector to build a substandard and corrupt Office of the Auditor General, which is the only building in Thailand that has collapsed, this indicates that Chinese capital has already infiltrated Thailand and reached the government sector.

For this reason, the estimated damages that Thailand may suffer up to 890 billion baht from President Donald Trump’s tax hike may not be an accurate figure, because Thailand already has more damage than this.

Why Thailand is a transit point for Chinese goods to the US?

Thailand has become a transit point for Chinese goods to the US due to a combination of trade policies, supply chain strategies, and economic incentives. Here’s why

1. US-China Trade War & High Tariffs

• The US has imposed high tariffs (up to 25%) on many Chinese goods since 2018.
• To avoid these tariffs, some Chinese companies reroute shipments through third countries like Thailand, where tariffs are lower.

2. Thailand’s Trade Privileges with the US

• Thailand benefits from US Generalized System of Preferences (GSP), allowing many Thai exports to enter the US duty-free or at low tariffs.
• Some Chinese firms minimally process goods in Thailand (e.g., repackaging, light assembly) to label them as “Made in Thailand”—qualifying for preferential tariffs.

3. Weak Origin Verification in Thailand

• Thailand’s Rules of Origin (ROO) enforcement is sometimes lax, making it easier for Chinese exporters to misdeclare origin.
• Some Thai factories act as “pass-through” hubs, importing Chinese components, doing minor processing, then exporting to the US.

4. Strategic Location & Free Trade Zones

• Thailand has special economic zones (SEZs) and free trade zones (FTZs), where goods can be stored, modified, and re-exported with minimal customs checks.
• Laem Chabang Port and Eastern Economic Corridor (EEC) serve as key logistics hubs for transshipment.

5. Chinese Investment in Thai Manufacturing

• Many Chinese companies set up factories in Thailand (e.g., electronics, solar panels, auto parts) to bypass US tariffs.
• Example: Chinese EVs and electronics are assembled in Thailand before being shipped to the US as “Thai-made.”

6. US Crackdown & Thailand’s Risk

• The US suspected transshipment and imposed 37% tariffs (April 2025) on some Thai goods.
• If Thailand doesn’t tighten controls, it risks losing US trade benefits and facing more restrictions.

Solution for Thailand?

✔ Stricter origin certification (prevent false “Made in Thailand” claims)
✔ Crack down on shell companies used for transshipment
✔ Strengthen supply chain transparency to satisfy US demands
✔ Diversify exports to reduce reliance on China-linked trade

Conclusion

Thailand’s role as a transit point for Chinese goods stems from tariff evasion strategies. While it brings short-term trade benefits, long-term risks include US sanctions and loss of trade privileges. Thailand must balance economic ties with China while ensuring compliance with US trade rules.

Will tariff negotiations with the US help the Thai economy?

But we must solve the problem of Chinese products flooding into Thailand at the same time. The Thai economy is facing two parallel problems.

1. The US raised tariffs by 36% → Exports to the US decreased.
2. Too many Chinese products flooding Thailand → Destroying domestic industries

If Thailand negotiates tariff reductions with the US but does not address the issue of Chinese goods or business infiltration from China, the results may not be worth the loss.

Advantages of Thailand and US tariff reduction negotiation is successful

• Exports recover, Thai products can compete again in the US market (e.g. electronics, automotive, food). Exporters and workers in the production chain have increased income.
• Attract foreign investment back. Investors are more confident if the US does not block Thai trade. American companies may relocate their production bases to Thailand (to avoid Chinese taxes).
• Restore trade relations, reduce the risk that the US will use harsher measures in the future.

If we don’t solve the problem of Chinese goods flooding into Thailand or Thailand is a transit point for Chinese goods to the US. the economy will still be at risk.

⚠️ Thai industries are being robbed of domestic markets by China.

• Cheap Chinese goods (both genuine and imitation) flood Thailand → Thai manufacturers cannot compete → Close businesses

⚠️ Thailand may face additional tariffs from the US in the future.

• If the US still sees Thailand as a “China transit route”
• The tax cuts may not last long

⚠️ The Thai economy is being penetrated by China to the point of danger.

• More and more Chinese goods are coming in, causing Thailand to have a trade deficit with China → Domestic consumption relies on China → Risk if China changes its policies
• State-to-state investment is being significantly penetrated by China.

Conclusion: Thailand should not be seen as a “transit point for China”
Thailand should be a “producer”, not a “transporter”

We must seriously address China’s tax avoidance while maintaining our relationship with the United States

If we can do this, the Thai economy will benefit in the long run from increased trade and investment confidence

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