New Tariff Reality for Thai Exporters
Thai food and electronics exporters are now navigating a complex new trade environment following the imposition of a 19% US tariff on their products. While this new rate is a welcome relief, being significantly lower than the initially threatened 36%, it still represents a substantial challenge for companies heavily reliant on the US market. According to analysis from Finansia Syrus Securities (FSS), this revised tariff puts Thailand’s exporters on a more level playing field with major regional competitors, such as Vietnam and China, who are also facing similar or even higher tariffs on their goods. While this development helps to alleviate broader concerns about a potential loss of competitiveness, the actual financial impact on the earnings and profitability of individual companies remains a key area of focus for investors, who are closely monitoring how the new tariff structure will be managed and whether the cost can be effectively shared.
Analyzing the Impact on Key Industries
The financial impact of the new tariff is expected to be felt differently across various sectors, with companies that have significant exposure to the US market being under the most intense scrutiny. In the food sector, for instance, companies like i-Tail Corporation (ITC) and Thai Union Group (TU) are at the forefront of this concern. Based on estimates from FSS, if the 19% tariff burden is shared equally between the exporters and their US clients, profits for some companies could see a reduction ranging from 2% to 15%, with TU and ITC experiencing the most notable impact. Conversely, if companies are forced to absorb the full tariff on their own, the profit reductions could be more severe, potentially ranging from 5% to 30%. However, most analysts believe that a cost-sharing arrangement is the most probable outcome, a scenario that would help to temper the negative impact on the bottom line.
Company-Specific Strategies and Vulnerabilities
The electronics sector is also preparing for potential profit headwinds, with individual companies positioned to respond in different ways. Delta Electronics (Thailand) (DELTA), which generates a significant portion of its revenue from the US, could face an 11-21% drop in its 2026 profit if it is required to bear 10-20% of the new tariff. However, the company has indicated that its existing agreements with US clients already have them absorbing a 15% tariff, leaving only a small portion for further negotiation. Similarly, KCE Electronics (KCE) could experience a decline in profit, but it may also gain a competitive advantage over its Taiwanese rivals who are subject to a higher 20% tariff. Meanwhile, Hana Microelectronics (HANA) is considered the most vulnerable player in the electronics sector due to its higher revenue exposure to the US market, relatively thin profit margins, and a less differentiated product lineup compared to its key competitors. Ultimately, the financial repercussions for both the food and electronics sectors will be determined by the results of ongoing negotiations with US buyers and the ability of each company to maintain its competitive position within this new tariff structure.
