Thai auto parts manufacturers are seeking new export markets amid growing concerns over US President Donald Trump's new trade tariff policy, piling on the sluggish domestic sentiment, says the Federation of Thai Industries (FTI).
Trump said on Feb 27 his plan to impose 25% tariffs on imports from Canada and Mexico will take effect March 4, while China faces an additional 10% levy from that date, according to media reports.
Trump suggested these countries had not done enough to halt the smuggling of illicit drugs into the US.
Thai auto parts manufacturers indirectly export their products to Mexico via Japanese car companies that invest in Mexico, said Suphot Sukphisarn, secretary of the Cluster of FTI Future Mobility-ONE (CFM-ONE).
CFM-ONE is monitoring the situation to see whether Thailand will face specific US tariffs because the former has a trade surplus with Washington, which may make it a target, he said.
Thailand's trade surplus with the US was US$35 billion last year, according to the Commerce Ministry.
The US was Thailand's largest export market in 2024, accounting for 18.3% of total shipments, representing $54.9 billion.
Thai auto parts manufacturers are struggling with a years-long slowdown in the domestic market, mainly caused by banks and vehicle financing companies adopting stricter auto loan criteria given the country's high level of household debt and weak consumer purchasing power.
The market is unlikely to fully recover within the next 3-5 years, according to CFM-ONE's estimates.
This may lead to job losses in the auto parts industry, which currently employs 700,000 people.
Some manufacturers already reduced the number of working days and imposed wage cuts.
"Most auto parts are supplied to the pickup segment, which is experiencing a plunge in sales," said Mr Suphot, attributing this to auto loan rejections, particularly in the Northeast and central regions.
The FTI is encouraging auto parts makers to produce new parts to serve Chinese electric vehicle (EV) manufacturers, but it may take months or years for them to adjust production from internal combustion engine technology, said Ampol Hompleum, secretary-general of the federation's Auto Parts Industry Club.
It will likely take 1-2 years for auto parts manufacturers to produce specific parts designed for EVs, according to the FTI.