Pachara Naripthaphan Warns that US Section 301 tariffs risk severely impacting Thai exports, urging the government to promptly address vulnerabilities and recommending that economic stimulus funds focus on structural reforms.
On 17 July 2026, Mr. Pachara Naripthaphan, a commissioner of the Securities and Exchange Commission, noted ongoing unresolved economic pressures. He pointed out that although exports grew 23.1% in April before slowing to 10.6% in May—supported by electronics and pre-orders ahead of new US tariffs—the domestic picture contrasts sharply. Growth is driven by exports and investment, not domestic purchasing power recovery. The current account ran a heavy deficit of 7.6 billion dollars in the same month, and household debt remains high at 85.9% of GDP.
Mr. Pachara said these reflect multiple ongoing pressures on the country, with three key issues he believes the government must urgently investigate and manage transparently for citizens and investors: addressing corruption in local civil service examinations, which undermines public trust in the state and investor confidence in the country's corruption situation.
"The government must accelerate improvements in communication, transparency, and rebuilding public confidence. Detecting wrongdoing and acting swiftly is positive and preferable to ignoring it, but explaining matters so the public understands is crucial. Currently, every explanation turns negative," said Mr. Pachara.
Another issue he is monitoring is the expansion of data centers in Thailand to support incoming AI technology investments. Many have been criticized for exploiting legal loopholes by registering buildings to avoid environmental impact assessments. The dispersed locations raise concerns about local water resources and the lack of real benefits flowing to local communities.
"We are on the right path; what remains is to carefully guide and regulate it properly. The state's role now is to inspect, correct deficiencies, and provide society with accurate facts to foster a positive investment environment in this sector," Mr. Pachara said.
Mr. Pachara highlighted a third significant pressure likely to affect third-quarter momentum and this year's GDP. While many expect increased government stimulus support, several internal factors remain unresolved, including conflicting industrial production and export figures, significant rises in imports, and the US trade tariffs transitioning from Section 122 to Section 301.
Mr. Pachara explained that Section 301 is an enforcement tool under the Trade Act of 1974, granting the US Trade Representative authority to impose various countermeasures. Currently, Thailand is under Section 122, facing a 10% tariff like other ASEAN countries, set to expire on 24 July. Thereafter, Section 301 tariffs will apply, with Thailand facing a 12.5% rate—higher than Indonesia and Malaysia's 10%. Thailand's higher rate is because it is grouped among countries without effective measures to block goods made with forced labor, similar to Singapore, the Philippines, and Vietnam.
Unlike Section 122, which lasts 150 days and expires automatically, Section 301 lasts four years unless extended after review by the US Trade Representative. In practice, these measures can persist for many years and sometimes be reinstated after ending. Noncompliance with agreements can be considered violations, leading to renewed enforcement measures.
"Section 301 tariffs do not expire automatically over time. Those waiting for the situation to resolve without adapting may be underestimating the risk," said Mr. Pachara.
There are also Section 232 tariffs on steel and aluminum products. Further developments depend on ongoing Thai delegation negotiations. However, the greater concern than the 12.5% tariff rate is Section 301's impact on the 'Negative list' products, which mostly cover key export items. This pressure exacerbates existing vulnerabilities simultaneously, especially in the export sector that currently supports much of the country's GDP, Mr. Pachara said.
From a capital market perspective, Mr. Pachara said the tariff measures "will affect investment requests, production, and the performance of many listed companies," particularly those heavily reliant on the US market. Investors and businesses need to closely assess these risks.
Mr. Pachara identified critical vulnerabilities related to this pressure. First, export momentum is waning. The US is Thailand’s top export market, with exports to the US totaling approximately 38 billion dollars from January to May 2026, accounting for 23.5% of total exports and a 40.3% increase over the same period last year. Part of this growth stemmed from export acceleration before tariffs took effect. Once this pre-shipment effect ends in Q2 and tariffs fully apply, exports are expected to weaken markedly.
Second is production capacity, which the US Trade Representative is investigating. Thailand is under scrutiny for industrial overcapacity, with the US citing Thailand's low capacity utilization over two consecutive years as part of its investigation. This figure aligns with previously noted structural weaknesses.
Third, transshipment goods are under watch. The US is shifting market access criteria from country of shipment to detailed checks on factory ownership, origin of parts, actual production levels, and whether value-added occurs in Thailand. This aligns with industrial production data showing export growth but low domestic production, while private investment growth depends heavily on imports, with value-added benefits accruing abroad.
Mr. Pachara emphasized that the current situation regarding future industry development is a make-or-break moment. Without effective negotiation and preservation of competitive advantages, Thailand risks falling behind as Malaysia, Vietnam, and Indonesia aggressively strengthen and address their own weaknesses.
"This issue is crucial for the business sector and domestic labor. A negative outcome would further suppress private sector purchasing power. At that point, even increased government stimulus might have limited relief because accumulated private and household debt would absorb the stimulus funds rather than circulate them in the economy as intended. The question is not how to stimulate the economy, but how to ensure that stimulus funds truly boost productivity. Without simultaneously addressing these structural problems, stimulus money will simply be wasted," he concluded.