Thailand's Origin Crackdown: Navigating U.S. Tariffs and Trade Tensions

Thailand’s government has launched a rigorous campaign to combat fraudulent origin claims in exports to the United States, aiming to mitigate the economic fallout of a punishing 36% reciprocal tariff imposed by Washington. The crackdown, which targets 49 high-risk product categories—including solar panels, steel lorry wheels, and artificial stone slabs—reflects a strategic pivot to align with U.S. trade enforcement while safeguarding Thailand’s export-driven economy.

Immediate Measures: Tightening the Screws on Fraud

The Department of Foreign Trade (DFT) has mandated origin verification for all exports in the 49 categories before issuing Certificates of Origin (Form C/O). This process ensures compliance with U.S. customs rules, which have grown stricter as Washington cracks down on trade circumvention. To date, only two cases of misrepresentation have been detected, resulting in revoked certificates and penalties. The DFT’s collaboration with U.S. customs has also reduced on-site inspections of Thai facilities from 10 to 6 product categories, signaling progress in building trust.

Broader Reforms: Balancing Compliance and National Interests

Finance Minister Pichai Chunhavajira has outlined five strategic reforms to address U.S. grievances and secure tariff relief:
1. Trade Surplus Reduction: Thailand aims to cut its $45 billion trade surplus with the U.S. by boosting imports of American goods like corn and meat offal.
2. Lowering Non-Tariff Barriers: Removing restrictions on 100 U.S. products, including those facing licensing hurdles or sanitary standards.
3. Streamlining Customs: Reducing delays for transshipped goods through faster clearance processes.
4. Strengthening Certification: Expanding origin checks to products modified in Thailand but originating elsewhere.
5. Energy Sector Ties: Exploring U.S. natural gas imports and encouraging Thai investments in American energy and food sectors.

These measures are framed as mutually beneficial, but Prime Minister Paetongtarn Shinawatra has cautioned against hasty concessions. The government faces pressure from a 4.5% slump in the SET Index and a weakening baht since the tariff announcement, underscoring the economic stakes.

Risks and Opportunities for Investors

The crackdown carries both risks and opportunities. While stricter origin checks may deter fraudulent exporters, they could also raise compliance costs for legitimate businesses. The DFT’s focus on products under U.S. Section 232 tariffs—such as steel pipes—hints at vulnerabilities in sectors exposed to national security-related duties.

Conversely, reforms targeting non-tariff barriers could open new markets for U.S. exporters, particularly in agriculture and manufacturing. Investors in Thai logistics and certification services may benefit from heightened demand for origin verification. Meanwhile, the push to import U.S. energy and food products could create opportunities in cross-border supply chains.

Conclusion: A Delicate Balancing Act

Thailand’s dual-track approach—combating fraud while negotiating tariff relief—highlights its precarious position in global trade politics. By reducing U.S. inspections and curbing origin fraud, it has demonstrated compliance, but the $45 billion trade surplus remains a sticking point. The government’s reforms, if successful, could ease U.S. pressure while diversifying Thailand’s economic partnerships.

However, the 4.5% SET Index drop and currency volatility underscore the fragility of investor confidence. For investors, the path forward hinges on whether Thailand can sustain export credibility without sacrificing domestic industries. The stakes are high: with 49 product categories under scrutiny and tariffs at 36%, the kingdom’s ability to navigate this tightrope will determine its economic resilience in an era of escalating trade tensions.