A key meeting between “Team Thailand” and the United States is scheduled for this week to iron out the details of new rules of origin, a crucial issue following the US’s decision to slap a 19% tariff on Thai goods.
While the 19% rate is more favourable than many had feared, a new, more serious concern has emerged: a potential 40% tariff on goods that fail to meet strict new local content requirements.
This measure, aimed at preventing other nations from transshipping their products through Thailand to avoid higher tariffs, is a major sticking point in ongoing negotiations.
The US is pushing for a minimum of 60% of a product’s value to originate from within Thailand to qualify for the standard 19% tariff.
A source from the Thai government revealed that Team Thailand will argue for a 40% local content threshold.
However, the US is holding firm on 50-60%. The Ministry of Commerce expects clarity on the final figure by the end of August 2025.
Pichai Chunhavajira, the Deputy Prime Minister and Finance Minister, confirmed that no final decisions have been made on which product categories will be affected.
Speaking at a recent seminar, Poj Aramwattananont, chairman of the Thai Chamber of Commerce, warned that a 50% local content requirement would be a severe blow.
“If Thailand is hit with a 50% local content requirement, many of our industrial sectors will not survive,” he stated, adding that the US is expected to apply the same rate to all countries.