Trump's tariffs could provide an upside

The Thai automotive industry, which has been plagued by weak demand for new vehicles, should improve in the second half of 2025 thanks to US President Donald Trump's plan to introduce new auto tariffs, says Naruedom Mujjalinkool, an analyst with Krungsri Securities (KSS).

Mr Naruedom said he believes the local auto industry could gain a windfall from Trump's plan to raise tariffs to 25% for vehicles imported into the US, as part of an effort to lift American production.

According to KSS, the countries targeted include China, Japan, South Korea and Germany.

There is a risk the US might include Thailand on the target list at some point, noted the brokerage.

If this happens, KSS sees only minimal impact to Thailand's car production. The country exports roughly 95,000 units of completely built-up (CBU) vehicles annually to North America, comprising the US, Canada and Mexico.

"We estimate about 50% of that is bound for the US, which is only 4% of Thailand's total car exports and 3% of total car production," said Mr Naruedom.

"If Trump does raise tariffs, Thailand might benefit because most of the Chinese and Japanese automakers have production hubs in Thailand. More automakers might relocate here to evade the US tariffs."

The latest tariffs are expected to be effective as of April this year and near-term impacts on the Thai automotive sector are unlikely, he said.

Ratasak Piriyanont, senior vice-president of macro strategies at Kasikorn Securities, said the local automotive sector could feel an indirect impact if the US applies tariffs on vehicles imports.

Although Thailand does not ship many CBUs to the US given the significant distance between the countries, a high volume of auto parts, especially electronic components, are exported to Europe for car assembly there, he said.

If the US applies a 25% import tariff on cars and European automakers are affected, the Thai auto parts industry cannot avoid the indirect impact, said Mr Ratasak.

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