How should Thai businesses cope with foreign tariffs?

In the world of free trade, competitiveness is not just about quality or price, but also includes "trade barriers" from abroad, especially tariff barriers erected to protect domestic producers at the destination. This has become a significant challenge for Thai businesses, particularly in an era of volatile global economies and constantly changing international trade policies. So how can Thai exporters adapt to survive and grow? This article from SME Shipping will explore what businesses should know and how to cope with this trade situation. 

What impact do tariffs have on exporting goods to foreign countries?

Tariff barriers are customs duties imposed on imported goods, resulting in higher prices for Thai products in destination countries and making them less competitive compared to domestic products or competitors from countries with preferential tariff treatment. The impacts include:

• Sales decreased because consumers chose cheaper products.
• Profits were lost due to having to lower selling prices to retain customers.
• Disadvantages include wasted time and costs due to the additional document verification and tax payment process.

What export products are affected?

Products from Thailand that are often affected by foreign tariffs include:

• Agricultural products: Rice, cassava, rubber, processed fruits.
• Industrial products: Steel, automotive parts, electrical appliances.
• Fashion and textile products: Clothing, shoes, bags.

In particular, if the destination country does not have an FTA agreement with Thailand, or revokes preferential tariff treatment (such as GSP), it will immediately make Thai goods more expensive.

How is the Thai government responding?

The government has implemented several measures to help Thai businesses cope with tariffs, such as:

• Negotiate free trade agreements (FTAs) with new trading partners such as the EU, India, and the Mercosur Group.
• Promote the application for preferential tariff treatment, such as FTA Form D, Form E, or CPTPP.
• Providing insightful information and training to entrepreneurs through the Department of International Trade Promotion and the Customs Department.
• Create new brands and standards to make products competitive based on value, not just price, such as quality certification, sustainability, and environmental considerations.

Choosing "export markets with low tariffs" or "markets with which Thailand has FTA agreements" is a crucial strategy for Thai businesses to effectively reduce costs and enhance their competitiveness. This is especially important in an era where many countries are reintroducing tariff barriers to protect their domestic markets. Planning to utilize FTA benefits effectively is essential for businesses seeking to export goods, reduce costs, and compete sustainably in international markets.

For example, here are some tax benefits that can be advantageous for entrepreneurs:

• Processed fruit producers
• For exports to China, use Form E.
• Exempted from import duty 100%
• Competitors from Vietnam who do not have Form E eligibility are subject to tariff 10%, giving Thai products a price advantage.

Tariff barriers are an unavoidable challenge for Thai entrepreneurs, but they are not insurmountable obstacles. With a good understanding of the import tariff system and by leveraging existing free trade agreements, entrepreneurs can...