Countdown to US tariff, 7 Thai industries at risk, millions of jobs on the line

Thailand is on edge ahead of the looming August 1, 2025, deadline, when the United States is set to announce its final decision on whether to maintain a steep 36% tariff on Thai exports or reduce the rate to a level comparable with other ASEAN countries.

If the outcome is unfavourable, Thailand’s export sector—especially labour-intensive industries such as textiles, garments, gems and jewellery, electronics, electrical appliances, processed foods, and rubber products—could suffer a significant blow. These sectors rely heavily on the US as a primary export market.

The repercussions are expected to ripple beyond just manufacturing and employment. Experts warn that sustained high tariffs could severely weaken Thailand’s competitiveness, hamper foreign direct investment (FDI), and stunt the country’s long-term economic growth. 

With regional rivals such as Vietnam and Indonesia securing lower tariff rates, Thailand risks being sidelined in the global investment arena.

More than 400,000 garment workers in the crosshairs

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.

“If the US decision puts Thailand at a disadvantage compared to competitors like Vietnam—who has already sealed a deal at a 20% rate—or Indonesia at 19%, buyers will likely shift more orders to those countries,” Yuttana said. “Meanwhile, Cambodia, still negotiating, remains under the same 36% tariff as Thailand.”

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.

Seven industries at risk of mass layoffs

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.

“The 36% tariff would have a severe impact on Thai exporters and workers in the garment and textile industries, which together employ around 400,000 people,” said Yuttana.

However, he expressed cautious optimism that Thailand could still secure a lower rate. “Personally, I expect the US to settle on a tariff of between 20% and 25%. If that happens, we won’t be at a major disadvantage. Clients should remain with us, and orders are likely to continue.”

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.

“It all depends on the final announcement from the US. If it’s 36%, then it’s every man for himself—we’ll see a prolonged downturn. But if we land a rate in the 20–25% range, we can still compete. Orders will continue, and jobs will be preserved. Right now, we can only wait and see,” he added.

Jewellery sector on edge as 800,000 workers face uncertainty 

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.

Somchai said it would be highly unlikely for Thailand to receive a tariff rate as low as 20%, like Vietnam. “That would be nothing short of a miracle,” he said. “Vietnam essentially gave everything up by slashing its tariffs on US imports to zero and committing to buying tens of billions of dollars' worth of American goods. Thailand can’t afford to match that without severe repercussions, particularly for our agriculture sector, which supports a large segment of our population.”

He believes a more realistic scenario would be a 25% tariff. “The US remains concerned about several issues with Thailand, such as Chinese goods being rerouted through Thai exporters, and geopolitical considerations like the US seeking to establish a military presence in Thailand—something we’ve not agreed to.”

Should Thailand receive a less favourable tariff than its competitors—including India, China, and Vietnam, all major gem and jewellery exporters—Somchai warned that existing production facilities in Thailand may shut down rather than expand. He noted that many international investors have already shifted operations to Vietnam, which now competes directly with Thailand in this segment.

The potential fallout could be devastating for the estimated 700,000 to 800,000 workers still employed in the sector, a sharp drop from over a million in previous years.

“If these workers lose their jobs, it will be very difficult to attract the next generation into the industry,” he added. “Young people today are turning to other professions that offer quicker and better pay. Once this knowledge base is lost, reviving the industry will be even harder.”

Hopes pinned on US investors as Thailand seeks lower tariff for electronics exports

Sampan Silapanad, Vice Chairman of the Electrical and Electronics Industry Group at the Federation of Thai Industries (FTI), has voiced concern that if the United States maintains high import tariffs on Thai goods, it could place Thailand at a distinct disadvantage against regional competitors.

Countries such as Malaysia, Vietnam and the Philippines—key ASEAN peers with similar electrical and electronics manufacturing capabilities—stand to gain if Thailand is hit with steeper tariffs. “In today’s globalised production environment, shifting orders to neighbouring countries has become remarkably easy,” Sampan said.

He warned that such a scenario would have significant repercussions across Thailand’s manufacturing base. It would impact not only contract manufacturers, but also upstream Thai suppliers and component producers. The sector, which currently employs an estimated 600,000 workers (down from over 800,000–900,000 a decade ago due to automation), could see further job losses.

The fallout could extend to reduced household income, including cuts to regular wages and overtime pay, ultimately weighing on Thailand’s broader economic growth.

When asked whether US electronics companies operating in Thailand have been lobbying their government to push for tariff exemptions—or at least reduced rates—Sampan confirmed that American firms have provided information and offered support to US authorities.

However, he added, “At the end of the day, it’s impossible to predict what President Donald Trump will decide. All we can do is wait for the official announcement in the coming days.”

Rubber products sector under threat

Luckchai Kittipol, Honorary President of the Thai Rubber Association, warned that Thailand’s rubber industry—particularly tyre manufacturing—faces significant disruption if the United States imposes high reciprocal tariffs.

He noted that several major multinational companies from Europe, Japan and China have established tyre and rubber production bases in Thailand, with the US as a primary export destination. Should Thai exports become uncompetitive due to unfavourable tariffs, the impact would extend beyond tyre exports to include rubber glove manufacturers. Together, these sectors employ over 100,000 workers.

Pornarit Chounchaisit, President of the Thai Real Estate Association, added that Thailand’s inability to reduce tariffs to zero on US agricultural imports—such as corn, cassava, pork and beef—could prompt inevitable retaliatory tariffs from Washington.

“Worse still, Thailand may face higher tariffs than competitors like Vietnam and Indonesia, which would undermine our industrial base and push manufacturers to shift production to those countries with lower trade barriers,” he said.

Millions of workers at risk across multiple sectors

A senior executive at a major Thai retail company commented that the immediate impact of US tariffs on domestic retail may be limited. However, in the long term, core export-driven industries—automotive, electronics, and agriculture—are likely to suffer.

“To stay competitive, Thai producers will be forced to cut raw material costs to offset higher tariffs. This will affect their suppliers and ultimately, the labour force,” the executive said.

According to initial estimates, 1–2 million workers are directly engaged in export-related industries, with several million more in the agricultural sector and 2–3 million in related supply chains. “If the situation worsens, the fallout could affect millions of workers. The government must prepare contingency plans to cushion the blow,” the source added.

Midea Thailand prepares a flexible response to tariff risks

Jackson Jai, Director of Midea Building Technology (Thailand), acknowledged that a 36% US tariff on Thai goods could reduce the competitiveness of Thai exports and dampen investor confidence.

Midea recently invested 2.2 billion baht in a new factory located on 46 rai in the CPGC Industrial Estate in Rayong. The facility, which began operations in April, employs around 1,000 workers and has a production capacity of 600,000 commercial air-conditioning units per year—over 90% of which are destined for the US market.

“At present, our production and workforce have not been affected,” Jai said. “We have built a flexible and robust business strategy to manage this challenge, and we are confident in the Thai government’s negotiation efforts with the US.”

He added that Midea is actively expanding into domestic and regional markets to reduce reliance on potentially vulnerable export channels.