Imports from China and US tariff tensions widen Thailand’s trade gap

A sharp swing in the balance: what the October data shows

Thailand posted its largest monthly trade deficit since early 2023 after a powerful surge in imports outpaced export growth in October. Commerce Ministry data show inbound shipments jumped 16 percent from a year earlier while exports rose 5.7 percent. The result was a 3.4 billion dollar deficit, a sharp reversal from the 1.3 billion dollar surplus a month earlier. The most striking shift came from China, where imports of capital goods and raw materials climbed 34 percent to 9.8 billion dollars, the highest monthly level this year. At the same time, Thailand’s exports to the United States rose 33 percent to 6.7 billion dollars, led by computers and parts, machinery, and steel.

October’s figures capped a long stretch of export growth, yet momentum has softened as global orders normalize. Exports increased for a 16th straight month, but at a slower pace than September. In value terms, October shipments reached 28.8 billion dollars, while imports totaled 32.2 billion dollars. Over the first ten months of 2025, exports rose to 282.98 billion dollars and imports to 286.85 billion dollars, leaving a cumulative deficit of 3.87 billion dollars. Electronics remained a bright spot, while agricultural exports contracted as floods and weaker harvests weighed on volumes.

Trade patterns were shaped by tariff policy in the United States. Washington’s reciprocal tariff regime has raised costs for many Asian exporters and encouraged a reordering of supply routes. Goods that are expensive to send directly to the US are increasingly moving around Asia first. Thai companies, and foreign manufacturers operating in Thailand, have responded by sourcing more inputs from China, then shipping finished or semi-finished goods to America. Analysts describe two overlapping forces behind the October swing: trade diversion toward Southeast Asia and a riskier practice, transshipment, that seeks to conceal the true origin of goods.

How US tariffs are reshaping Asia’s trade routes

Tariffs can change where goods travel and where they are processed before reaching customers. Trade diversion happens when companies reroute shipments to avoid higher costs in one market, choosing alternative destinations or intermediate stops. In Southeast Asia, that has meant a larger inflow of Chinese components and equipment. Independent estimates suggest that tens of billions of baht worth of Chinese industrial products, originally intended for the US market, could be redirected into Thailand over the next three years. Separate research points to a potential redirection of up to 2.4 billion dollars of Chinese goods into Thailand in the same timeframe. Telecommunications equipment, automobiles and parts, and computer hardware are at the center of this shift.

Transshipment is a different issue. It involves moving goods through a third country without substantial transformation, sometimes to mask their origin and evade tariffs. October data gave fresh cause for scrutiny. Thai exports of computers and parts to the US surged 110 percent to 2 billion dollars, while imports of computer parts from China rose 35 percent to 559 million dollars. Steel showed a similar pattern, with imports from China up 58 percent to 422 million dollars and exports to the US up 55 percent to 147 million dollars. US authorities have warned that goods classified as transshipped could face tariffs as high as 40 percent. Determining origin turns on rules of origin, which assess how much value is added in the country claiming to export the finished product.

US policy is also moving on a bilateral track. Washington and Bangkok have outlined a framework for reciprocal trade that seeks to expand market access and address duty evasion. The framework envisions Thailand eliminating tariffs on nearly all goods and removing non tariff barriers to US industrial and agricultural exports. It also includes commitments on digital trade and cooperation on export controls and origin verification. The US side plans to keep a 19 percent base tariff on Thai imports, with some product specific exceptions, while placing a priority on stopping transshipment. That blend of market opening and enforcement underscores why Thai exporters, importers, and customs authorities are now under closer watch.

The China link: what Thailand is importing and why

Much of the October swing can be traced to China, Thailand’s largest source of imported machinery and electronics. In the first four months of 2025, Thailand recorded a 19.23 billion dollar trade deficit with China, with imports totaling 31.56 billion dollars and exports 12.33 billion dollars. April alone set a monthly record for imports from China at 8.82 billion dollars. The top inflows were electrical machinery and parts, general machinery and components, home appliances, computers and related parts, and chemicals. Business leaders say manufacturers are stockpiling inputs given uncertainty over US tariffs and the risk of higher costs later.

The trend remained pronounced into the second quarter. Over the first five months of 2025, total trade with China reached 57.71 billion dollars, up more than a quarter from a year earlier. Imports soared to 40.50 billion dollars, outpacing exports at 17.21 billion dollars and widening the deficit to 23.29 billion dollars. The composition of these imports matters. Many are capital goods, raw materials, or semi-finished inputs that upgrade production capacity. They can support future output but swell the deficit today. On the export side, Thailand ships computers and parts, fruit, rubber products, plastic pellets and other agricultural and industrial goods to China, but the value of these shipments is lower than the high tech items it imports.

For Thai producers, the inflow of lower cost machinery and components has two faces. It can reduce input prices and help larger factories scale up orders for the US, Europe, and Asia. It also intensifies competition at home, especially for small and medium sized firms facing a wave of Chinese finished goods. Economists have urged safeguards to manage this adjustment: early warning systems to flag import surges, tighter rules of origin and traceability to avoid transshipment claims, stricter quality standards for sensitive categories, and targeted funds to help domestic firms upgrade equipment and skills.

Is Thailand a transshipment hub or a manufacturing winner?

The October numbers give ammunition to both views. The jump in US bound electronics can reflect Thailand’s strengths in assembly, testing, and final kitting for products like laptops, servers, and control panels. Yet the simultaneous rise in imports of Chinese parts suggests a large share of the value originates elsewhere. Some Thai exports may be pass through shipments with limited local content, which can deliver headline export gains without a matching rise in domestic value added or industrial employment. Banking analysts and private sector researchers caution that this pattern, if sustained, can leave the economy vulnerable when tariff exemptions tighten or when exchange rates move against exporters.

Steel flows illustrate the tightrope. Thailand imported 422 million dollars of steel from China in October, up more than half from a year earlier, while exporting 147 million dollars of steel to the US in the same month. If the imported steel undergoes substantial transformation in Thailand, it can qualify as Thai origin. If it does not, US authorities can classify it as transshipped and levy extra duties. Investigations typically examine where key processes occur, how much local value is added, and whether documentation matches production reality.

Thai officials are working with the US on local content rules for sensitive products. Policymakers have indicated that any threshold must be on par with arrangements offered to other partners. The goal is to preserve legitimate assembly and manufacturing in Thailand while preventing duty evasion. That balance is crucial for electronics, steel, auto parts, and other sectors where regional supply chains are deeply integrated and where one country’s tariff move can ripple through the production plans of many firms.

Currency strength, growth risks, and the central bank’s challenge

The baht has appreciated by more than 5 percent against the dollar this year, lifting import purchasing power but making Thai goods more expensive abroad. A larger trade deficit can relieve pressure on the currency by trimming the current account surplus, which in turn can support exporters if the baht stops climbing. The shift is delicate. A currency that strengthens too quickly squeezes margins for factories that price in dollars, while a sudden weakening can raise import costs for energy and key inputs. Finding a steady range is one reason trade flows and tariff policy now matter for monetary settings.

Exports account for more than half of Thailand’s GDP, so months of weaker shipments can pull down growth and complicate rate decisions. There are offsets. Manufacturing activity has expanded, with the S&P Global Manufacturing PMI rising to its strongest reading since mid 2023, and demand for digital technology equipment remains firm. At the same time, tourism arrivals have softened compared with last year and floods have reduced output of some crops. The mix points to steady but uneven growth, with electronics leading, agriculture under pressure, and services recovering at a slower pace than hoped.

What Bangkok is doing to manage US pressure

Thai authorities are pursuing a two track response. Diplomatically, Bangkok is negotiating with Washington on reciprocal trade and sector specific rules that would preserve access for key products. Officials say Thailand is ready to address non tariff barriers and improve cooperation on origin verification. To ease US concerns over bilateral imbalances, the government plans to increase imports of corn, soybeans, crude and ethane, and is assessing additional imports of US beef and spirits. Tariff cuts for selected American goods are under review. The aim is to narrow the US reported goods surplus and limit the risk of broader tariff penalties.

The stakes are large. Commerce officials have warned that Thai exports could face losses of 7 to 8 billion dollars if tariff equalization raises effective US rates by around 11 percentage points on key categories. Semiconductor shipments have been flagged as a tariff risk at a 25 percent rate, which would ripple through factories that assemble chips and electronic devices. Beyond the US, Bangkok is keeping up talks with Europe. The Commerce Ministry expects exports to come in at around 332 to 334 billion dollars this year, a double digit increase from 2024, but it has cautioned that next year’s growth is likely to slow as the base effect fades and tariff changes bite.

Winners and losers across Thai industry

Electronics and digital hardware are the outliers on the upside. Orders for computers, electronic circuits, electrical switchboards, and control panels have supported factory output for more than a year. Jewelry excluding gold has helped too. On the downside, sectors tied to traditional manufacturing and commodities have faced a tougher landscape. Agricultural exports have contracted in recent months, with fruit shipments hit by weather and logistics, while motor vehicles and parts have faced uneven demand and the prospect of higher US duties. Steel products are squeezed between low cost imports and stricter rules abroad.

Policy support is being adjusted with these realities in mind. Export promotion efforts are moving beyond established buyers and into secondary markets across South Asia, the Middle East, and Latin America. At home, business groups are pushing for faster customs procedures, targeted tax relief, and financing that helps smaller firms adopt new equipment and meet stricter sourcing standards. The faster Thailand upgrades the link between export activity and domestic value creation, the more resilient it will be to tariff swings and currency shifts.

What to watch next

Several turning points will shape the next few months. First, the outcome of ongoing US tariff talks with major partners will influence how much global trade continues to be diverted through Southeast Asia. A tougher US stance on rules of origin or a wider application of punitive rates on suspect shipments would place more pressure on Thai exporters that rely on imported inputs. Second, changes in China’s export strategy, including pricing and product mix, will affect the scale of imports entering Thailand. Third, the path of the baht will matter for pricing and profitability across sectors. Fourth, any progress on a reciprocal trade framework with the US and on an EU Thailand free trade agreement will help define market access for 2026 and beyond.

The October deficit is a warning signal, but it is also a snapshot of a fast changing trading system. Thailand’s challenge is to keep the benefits of being a regional manufacturing hub while avoiding the pitfalls of pass through trade. That means tighter origin tracking, smarter import management, and a sharper focus on domestic value added. If those steps advance in tandem with broader market access, the trade balance can stabilize even in a turbulent tariff cycle.

Key Points

• Thailand ran a 3.4 billion dollar trade deficit in October, the largest since early 2023, as imports rose 16 percent and exports grew 5.7 percent.
• Imports from China jumped 34 percent to 9.8 billion dollars, led by machinery, electronics, and raw materials.
• Exports to the United States climbed 33 percent to 6.7 billion dollars, with computers, machinery, and steel leading gains.
• Analysts warn of transshipment risk, with US authorities signaling tariffs up to 40 percent on goods deemed to evade origin rules.
• Thailand’s trade deficit with China widened in early 2025, reaching 23.29 billion dollars in the first five months as imports outpaced exports.
• The baht has appreciated more than 5 percent this year, tightening margins for exporters while lowering import costs.
• Officials are negotiating a reciprocal trade framework with the US and plan to lift imports of US goods to reduce the bilateral surplus.
• Electronics remain resilient, agriculture has contracted, and autos face tariff headwinds and uneven demand.
• The Commerce Ministry expects 2025 exports of 332 to 334 billion dollars, with growth likely to slow in 2026 as tariff effects intensify.