What To Know
- 33% of Thailand’s total exports to the US in 2025, according to an analysis of Thai trade and industrial data.
- The report examines alleged practices in which Chinese products are routed through third countries, assembled or processed there and subsequently declared as originating in those countries, potentially allowing exporters to avoid US tariffs or other trade restrictions.
Thailand’s export sector is facing a significant new challenge as the United States intensifies its campaign against illegal transshipment, potentially exposing eight major Thai industries responsible for US$52.23 billion in annual US-bound exports to tougher checks on product origins, manufacturing processes and supply chains.
The eight sectors accounted for 72.33% of Thailand’s total exports to the US in 2025, according to an analysis of Thai trade and industrial data. As Washington increases its focus on supply-chain transparency, this Bangkok Business News report highlights an important distinction: the estimated 172.36 billion to 344.72 billion baht in exposure represents exports that could face additional examination, rather than projected losses for Thailand.
Image Credit: Bangkok Business News
Eight Major Industries in the Spotlight
The sectors potentially facing greater scrutiny include electronic and electrical equipment, machinery and components, iron and steel, iron and steel products, plastics, vehicles and components, copper products, and measuring, medical and optical instruments.
Three scenarios have been calculated based on 10%, 15% and 20% of exports from these sectors being selected for stricter origin verification.
At an exchange rate of 33 baht to the US dollar, the value potentially subjected to additional checks ranges from approximately 172.36 billion baht under the low scenario to 258.56 billion baht in the medium scenario and 344.72 billion baht in the high scenario.
Crucially, these figures should not be interpreted as exports that will necessarily disappear or as direct economic losses. Products can continue entering the US market when exporters provide sufficient documentation demonstrating the origin of materials and proving that manufacturing undertaken in Thailand complies with applicable rules.
Washington Sharpens Focus on Transshipment
The heightened concern follows the August 13 release of The Great Transshipment Scam: Rise, Scope, and Costs by the White House Office of Trade and Manufacturing Policy.
https://www.whitehouse.gov/releases/2026/08/the-great-transshipment-scam
The report examines alleged practices in which Chinese products are routed through third countries, assembled or processed there and subsequently declared as originating in those countries, potentially allowing exporters to avoid US tariffs or other trade restrictions.
Practices attracting scrutiny can range from relabelling products and altering documentation to routing goods through another country without meaningful manufacturing. More complex cases can involve factories or investments in third countries that continue to rely heavily on Chinese components, raw materials, technology or corporate control.
However, the presence of Chinese investment, components or raw materials does not automatically constitute illegal transshipment. The critical issue is whether manufacturing complies with applicable rules of origin and whether sufficient production and value creation genuinely take place in the exporting country.
Tier 2 Status Does Not Mean New Tariffs
Thailand has been placed in Tier 2 alongside Brazil, Indonesia, Malaysia, Turkey and Vietnam, reflecting substantial integration with China-linked sourcing, manufacturing, logistics and regional trade networks.
The classification should be viewed as a risk category rather than an accusation that Thailand or Thai exporters have engaged in illegal transshipment.
Importantly, Tier 2 status does not automatically impose new US tariffs on Thai goods. It could, however, influence risk screening and result in US Customs and Border Protection examining certificates of origin, manufacturing records, supply chains and sources of industrial inputs more closely.
Exporters unable to quickly provide convincing documentation could consequently face additional verification requirements, increasing the importance of detailed and traceable production records.
Factory Trends Could Trigger Questions
One issue likely to attract attention is the divergence between rising Thai exports to the United States and declining capacity utilization across several important industries.
Capacity utilization for electronic and electrical equipment declined from 65.87% in 2021 to 58.99% in 2025. Vehicles and components recorded a sharper drop from 69.45% to 52.79%.
Plastics declined from 61.74% to 56.04%, while iron and steel fell from 52.29% to 48.40%.
These figures are warning indicators rather than proof of wrongdoing.
Nevertheless, the combination of weaker factory utilization and stronger US-bound exports could prompt questions about increasing dependence on imported components, raw materials or semi-finished products.
For manufacturers, the ability to demonstrate genuine production and substantial value creation inside Thailand could therefore become increasingly important.
China’s Expanding Role Raises the Stakes
Thailand’s rapidly growing imports from China add another dimension to the issue.
Thai exports to China increased from US$23.57 billion in 2016 to US$39.38 billion in 2025, representing growth of 67.1%.
Imports from China expanded considerably faster, surging 164.5% from US$41.04 billion to US$108.56 billion during the same period.
Thailand’s annual trade deficit with China consequently widened from US$17.48 billion in 2016 to US$69.18 billion in 2025.
Across the decade from 2016 through 2025, the accumulated deficit reached approximately US$286.88 billion, equivalent to about 9.61 trillion baht.
For 2026, projections put Thai exports to China at approximately US$41.50 billion against imports of US$116.99 billion, potentially producing a further deficit of about US$75.50 billion.
Much of this import growth involves industrial goods and components used by Thai manufacturers, including electronics, machinery, automotive components, plastics, steel, copper and medical or measuring equipment.
Reliance on Chinese inputs does not itself demonstrate illegal transshipment. However, it could encourage American authorities to demand stronger evidence showing where components originated, what manufacturing occurred in Thailand and how much value was added domestically before finished products reached the US.
Thailand Faces a Traceability Test
Proposed safeguards include establishing watchlists for higher-risk products by comparing imports from China with exports to the United States and conducting closer inspections where exports rise unusually quickly without corresponding increases in electricity consumption, employment, machinery utilization or domestic raw-material demand.
Greater information sharing between customs, trade, industry, investment and industrial-estate authorities could also strengthen Thailand’s ability to trace goods throughout the manufacturing chain.
Higher-risk investment projects could be required to disclose manufacturing processes, sources of raw materials and the value added within Thailand. Another proposal involves developing an AI-supported Thai Origin Traceability system capable of tracking production from raw materials through to finished exports.
Thailand must also draw a clearer line between genuine foreign investment that creates meaningful manufacturing activity and operations involving little more than routing, relabeling or minimal processing.
For Thai exporters, the emerging challenge goes well beyond additional paperwork at the US border. As international trade becomes increasingly shaped by tariff disputes, geopolitical competition and detailed supply-chain investigations, verifiable product origin is becoming a competitive asset in its own right. Thailand’s ability to prove genuine domestic manufacturing while identifying questionable transshipment operations could be critical to protecting legitimate businesses, maintaining confidence in Thai-made goods and preserving access to the strategically important American market.
