The US recently imposed very high tariffs on Chinese products, notably electric vehicles and semiconductors, which will cause China to concentrate on expanding its EV manufacturing within Asia, with Thailand poised to become a key export hub, says the Federation of Thai Industries (FTI).
President Joe Biden's administration cited Beijing's unfair trade practices for the hike, with EV tariffs to be quadrupled to a 100% rate, solar cells and semiconductors doubled to a 50% rate, and certain steel and aluminium imports from China raised to 25%, more than triple the current level, according to media reports.
China reportedly vowed to take measures to protect its interests.
"The trade war is intensifying and putting pressure on industries, presenting a challenge to the Thai government as it seeks an appropriate stance amid a conflict that could impact its economy," said Kriengkrai Thiennukul, chairman of the FTI.
He said he believes Thailand can take advantage of the trade war, provided the government carefully implements its overseas policies.
Chinese EV makers are expected to relocate their production facilities to Asian countries, including Thailand, as well as expand their market in the region, said Mr Kriengkrai.
To avoid high tariffs on EVs, Chinese automakers will use Thailand as an export base, shipping EVs to countries including the US, he said.
Many Chinese companies have invested several billion baht building EV assembly plants and battery factories in Thailand, following the government's EV incentive packages, launched as part of efforts to make Thailand an EV production hub in Southeast Asia.
Over the past 2-3 years, the Board of Investment supported investments worth 80 billion baht in the EV industry, with total EV production of 400,000 units.
The government set a goal for battery EVs to comprise 30% of total car manufacturing by 2030 through the production of 725,000 zero-emission cars, 675,000 electric motorcycles and 34,000 electric buses and trucks.
Mr Kriengkrai said the FTI is aware the growth of the EV industry will affect local auto parts makers that make up the supply chain for internal combustion engine cars.
The federation is conducting a study on measures to improve the capabilities of these manufacturers, mostly small and medium-sized original equipment manufacturers, equipping them with new technological know-how to adjust their businesses to serve the EV market.