US Tariffs Force Thailand to Pivot: Prioritising Sustainability, Digitalisation, and Market Diversification as Growth Slows

A broad and evolving bloc of US tariffs is poised to reshape Thailand’s trade landscape, with the response of Thai industries and policymakers playing a decisive role in shaping the country’s resilience over the next few years. The convergence of renewed trade headwinds from the United States and a wave of European Union and global sustainability rules is pushing Thai firms to adapt quickly. The changes are not just about short-term shifts in shipments; they carry long-term implications for market access, competitiveness, and the strategic emphasis on sustainability and digital transformation. Against this backdrop, the Bank of Thailand has highlighted a gradual, channel-driven impact on the economy, underscoring the need for proactive measures from businesses—especially in sectors most exposed to US-origin tariffs and in the SME segment that forms the backbone of Thai manufacturing and export activity. Against this backdrop, Thai firms are increasingly looking to diversify markets, accelerate green transition plans, and invest in productivity gains as core strategies for weathering tariff shocks and capitalizing on new opportunities in a more sustainability-conscious global market.

Economic Impact Overview and Market Outlook

The Bank of Thailand’s assessment frames the US tariffs as a transformative force in global trade dynamics, with Thai economic activity likely to experience gradual, multi-channel effects over an extended horizon. The central bank’s prognosis underscores that the immediate risk environment is characterized by heightened uncertainty, but the more consequential shifts will unfold over the medium term as tariff regimes stabilize and supply chains reconfigure. In this scenario, Thailand’s GDP growth is projected to dip below 2% over the next 18 months, a meaningful concession from the 2.5% growth rate observed in 2024. This projection signals a departure from the more robust growth momentum of recent years and highlights the sensitivity of Thailand’s economy to external demand conditions, particularly those emanating from the United States, a major destination for Thai exports.

Thailand’s export sector is identified as one of the most vulnerable segments of the economy in the wake of tariff escalations, with direct shipments to the US bearing the brunt of the impact. The data show that exports to the United States have long stood as a substantial share of total Thai outbound goods—approximately 18% of total exports and roughly 2.2% of gross domestic product. This historical prominence makes the tariff environment a critical determinant of Thailand’s export performance. Moreover, US-bound exports grew by an average of 3% annually from 2020 to 2024, underscoring the significance of the US market in supporting export volumes and trade balance, as well as its role as a barometer for broader regional demand.

The central bank expects the effects of US tariffs to become more evident in the second half of 2025, a timeline that aligns with the typical pattern of firms accelerating shipments ahead of anticipated tariff tightening. In practical terms, the expectation is for a modest surge in export activity during the second quarter as manufacturers and exporters rush to clear inventory and finalize orders before stricter tariff regimes take full effect. Following this pre-emptive push, the Bank projects that export volumes will contract by about 4% in the latter half of the year, a decline that would reverberate across multiple product groups and logistics chains.

Several sectors are singled out as especially susceptible to tariff-induced disruptions. Automotive and parts, electrical appliances, and processed foods are among the key industries expected to absorb the lion’s share of trade risk, given their exposure to US demand and to tariff regimes that directly affect goods in these categories. Beyond these primary sectors, products within the broader global supply chain bound for the US—including rubber, auto parts, steel, and chemicals—are projected to face intensified tariff pressures. Collectively, these goods account for around 4.3% of Thailand’s total exports, illustrating how tariff policy can ripple through the trade architecture beyond obvious direct shipments.

A concrete illustration of tariff risk is the rubber sector, which plays a critical role in the US-bound tyre market. Rubber exports face heightened exposure to potentially punitive tariffs of up to 900% on transshipped goods, a scenario highlighted in recent trade discussions. Such a move would have a disproportionately negative effect on Thai manufacturers and exporters dependent on rubber and rubber-derived components, complicating supply chain planning and raising costs for downstream users. The vulnerability is magnified for small and medium-sized enterprises (SMEs) that operate in export-oriented subsectors, where margins are already tight and liquidity constraints are more pronounced.

Against this backdrop, Thai SMEs—especially those involved in export and manufacturing activities such as processed seafood and automotive components—are expected to feel the tariff impact acutely. The tariff regime adds to existing pressures on SMEs, including rising operating costs and inflation, which are already paramount concerns in business sentiment and budgeting. The UOB Business Outlook Study 2025 captures this mood, showing a decline in business sentiment from 58% in 2025 to 52% following the US tariff announcements. Small enterprises appear to harbor greater concern about the potential economic repercussions, reflecting the exposure of SMEs to tariff-driven revenue volatility and the relative fragility of their balance sheets.

Cost pressures and inflation are among the top concerns for Thai businesses. The study reveals that about 60% of firms anticipate ongoing cost pressures, while 57% expect higher inflation within Thailand. This dual price pressure—from input costs to consumer prices—poses a challenge to profit margins and competitiveness, particularly for labour-intensive sectors and industries with thinner margins. Structural problems within the SME segment further compound these challenges. Many local SMEs struggle with low productivity, outdated technology, and limited digital adoption, restricting their ability to compete on cost, speed, and product differentiation in a more volatile global environment.

In parallel with these macroeconomic headwinds, a notable pattern emerges in the SME landscape: a substantial portion of larger SMEs and many mid-sized players have already implemented cost-saving measures to manage rising expenses. The UOB findings indicate that roughly three in five businesses have adopted such measures, led by medium-sized enterprises that are actively driving efficiency gains. This trend signals a practical pivot toward restructuring operations, optimizing procurement, and deploying new process improvements to withstand tariff shocks and keep competitive in an uncertain environment.

Taken together, these dynamics shape a complex picture of risk and opportunity for Thailand. On the risk side, the potential contraction in exports, particularly to the US, poses a drag on growth, a challenge for investment, and a pressure point for domestic consumption. On the opportunity side, tariffs can heighten the incentive for firms to diversify markets, accelerate the adoption of sustainable and value-added production, and invest in digital transformation and productivity-enhancing technologies. In this context, the central bank’s forecast—that export declines and GDP softness may continue into the near term—serves as a clarion call for proactive resilience-building by firms, banks, and policymakers alike. The next wave of dynamics will hinge on how quickly Thai players can adapt to shifting tariff landscapes, capture alternative demand pools, and foster a more sustainable and tech-enabled production ecosystem.

Sectoral Impacts and SME Resilience

Within the broader forecast, specific sectors are expected to bear the brunt of US tariff dynamics more than others, and SMEs in these spaces are likely to face a compounded set of challenges. The automotive and parts sector stands out as a priority area for attention and strategic planning. This industry face exposure not only to demand swings in the US market but also to supply chain constraints that may emerge as tariff rules tighten and as manufacturers seek to reconfigure their sourcing networks. Electrical appliances, another critical category, is similarly vulnerable due to the high degree of integration into US consumer markets and the sensitivity of electronics to cost pressures and regulatory compliance costs. Processed foods, including seafood and value-added products destined for US retailers, bear risk from tariff-induced price adjustments and potential shifts in consumer demand driven by price changes or import restrictions.

In addition to these direct sectors, products within the global supply chain bound for the US—such as rubber, auto parts, steel, and chemicals—loom large in the risk calculus. These goods collectively contribute a meaningful portion of Thai exports and are subject to tariffs that can induce cascading effects across multiple downstream industries. In the rubber arena, the risk is particularly notable given the potential for 900% tariffs on transshipped goods, a scenario that would destabilize pricing, disrupt existing supply agreements, and threaten continuity of supply to critical manufacturing processes in the US market. This example underscores how tariff policy can impose asymmetric risks on specific materials and end-uses, compelling Thai producers to explore alternative markets, adjust product specifications, and consider strategic stockpiling or near-shoring opportunities to mitigate exposure.

SMEs face an elevated risk profile in this environment. Many SMEs in export and manufacturing segments, including processed seafood and auto components, operate with limited financial buffers and a narrower product mix that heightens sensitivity to tariff-induced price shifts. The reliance on low-cost production models, rather than value-added or branded goods, makes some SMEs particularly vulnerable to cost-driven competitive displacement if tariffs raise landed costs or alter consumer demand patterns. Additionally, the workforce in many SMEs often lacks advanced digital skills, which can impede rapid retooling, automation, and data-guided decision-making—critical levers for improving productivity and mitigating cost pressures in a tariff-affected economy.

The UOB Business Outlook Study 2025 adds nuance to this picture by illustrating the sentiment dynamics among Thai business leaders. The decline in confidence post-announcement reflects a tempering of expectations in the near term, especially among smaller enterprises that may have tighter financial constraints and less access to capital for strategic adjustments. At the same time, the study highlights that more than 60% of businesses recognize sustainability as important, signaling a shift in strategic priorities even in a climate of tariff-induced stress. This evolving mindset—placing sustainability and digital capability at the center of competitiveness—reflects a broader transition in Thai business culture toward resilience, operational excellence, and value creation beyond mere cost competition.

From a practical standpoint, cost pressures and inflation are not merely macroeconomic phenomena; they translate into tangible operational decisions for SMEs. A substantial share of firms anticipate higher costs and inflation, which can erode margins and restrict investment in productivity enhancements or market diversification. To cope, many are pursuing cost-saving initiatives, optimizing supply chains, and exploring adjacent markets or product lines to reduce exposure to a single customer base or geography. In some cases, SMEs are pivoting away from traditional export profiles toward more diversified portfolios—such as shifting from human-consumption food exports to pet nutrition products—an example of how firms adapt to shifts in demand patterns and tariff-driven pricing conditions.

Within this context, the role of digital transformation and sustainability becomes critical. SMEs that accelerate automation, adopt digital tools, and invest in product innovation—especially in areas like value-added processing, packaging, and branding—are more likely to withstand tariff shocks and capture greater returns on investment. The UOB findings emphasize that while more than 90% of the bank’s business clients consider sustainability important, only about 53% have implemented related practices, with smaller enterprises trailing in adoption. This gap signals a clear opportunity for policy support, financing, and advisory services to accelerate practical action. For SMEs, the tariff era can be an inflection point to intensify focus on environmental, social, and governance (ESG) strands, energy efficiency, waste reduction, and responsible sourcing as pathways to differentiation and resilience.

A broader strategic dimension involves diversification of markets and product strategies. Some Thai SMEs and larger firms are adopting a broader global footprint by seeking new markets beyond the United States or by expanding product lines to mitigate risk associated with a single major buyer. Diversification can entail shifting toward markets with growing demand for Thai goods or pivoting to new product categories that align with evolving consumer preferences and regulatory requirements in destination markets. This strategic diversification complements the shift toward higher value-added, less tariff-exposed offerings and can help preserve revenue streams even as tariff policies evolve. The trend toward such diversification is a clear signal of corporate foresight in Thailand’s business ecosystem, where firms increasingly view resilience as a multi-faceted capability that integrates market diversification, technology adoption, and sustainable differentiation.

A key point of leverage for Thai SMEs in this environment is the ongoing transition toward sustainability and digitalization as core business strategies. The UOB Thailand perspective suggests that the transition to sustainable models is not only a compliance exercise but also a strategic growth accelerator. The study shows that sustainability is no longer merely about compliance with external standards; it has become a driver of competitive differentiation, risk management, and long-term profitability. The data indicate that more than 60% of businesses plan to take concrete actions in the post-tariff period, signaling a proactive approach rather than passive adaptation. This readiness to act suggests that the tariff shock could catalyze a broader, industry-wide shift toward sustainable finance, energy efficiency, and digital-enabled optimization, in which both large enterprises and SMEs play meaningful roles.

Finally, the financial services sector, including institutions like UOB Thailand, is positioning itself to support this transition. The emphasis on sustainable financial solutions—designed to help firms invest in efficiency, renewable energy adoption, and digital transformation—reflects a recognition that well-structured financial products can lower the barriers to implementing sustainability-driven upgrades. Banks can play a pivotal role by providing advisory services, risk management tools, and flexible funding that align with companies’ longer-term strategic objectives. In a tariff-affected environment, such financial support can help Thai businesses maintain liquidity, invest in modernization, and pursue revenue diversification strategies that reduce dependence on any single market. The convergence of tariff-driven risk, SME resilience, and sustainability-oriented growth creates a complex but navigable landscape in which well-informed, proactive actions can unlock new opportunities and maintain Thailand’s competitiveness in a changing global economy.

Sustainability, Digital Transformation, and Strategic Adaptation

The evolving policy and market environment is accelerating a strategic pivot among Thai firms toward sustainability and digital transformation, as businesses recognize that sustainable practices can reduce exposure to tariff shocks, improve efficiency, and unlock new value propositions for customers. The Bank of Thailand’s macro view intersects with company-level strategies to illuminate a path toward more resilient growth, where environmental stewardship, governance, and social considerations become central to long-run profitability. Within this framework, sustainability is increasingly understood not as a compliance burden but as a strategic accelerator—enhancing supply chain reliability, strengthening brand equity, and enabling access to capital that favors green investments and energy-efficient upgrades.

The UOB Business Outlook Study 2025 reinforces this view by highlighting that 60% of businesses now regard sustainability as an important priority, a proportion that reflects growing awareness of its strategic value in a tariff-constrained global market. This sentiment is not just a moral or regulatory alignment; it translates into concrete business decisions. While more than 90% of the bank’s business clients acknowledge the importance of sustainability, only about half have implemented related practices, with medium-sized enterprises trailing behind larger firms in execution. This gap underscores an opportunity for targeted support—whether through advisory services, pilot programs, scalable implementation plans, or financing designed to bridge the gap between intention and action.

Nonetheless, the study reveals a notable momentum toward action in a post-tariff environment. More than 60% of respondents indicate plans to take concrete steps after tariffs stabilize, signaling a broad willingness to invest in sustainability-driven initiatives. The findings also show that nearly 40% of businesses have fully integrated digital tools, illustrating a significant baseline level of digital adoption that can be built upon. A larger share—about 68%—anticipate faster digitalization adoption in the near term, reflecting a belief that digital capabilities will be essential to maintaining competitive advantage as markets evolve and tariff structures shift.

The adoption of renewable energy and related advisory services is already on the radar for roughly 30% of Thai businesses, indicating a growing interest in energy transition and sustainability consulting as value-added services. However, cost remains a persistent barrier to widespread implementation. High capital expenditure, uncertain payback timelines, and concerns about the availability of affordable financing all contribute to slower adoption than some firms would prefer. Infrastructure gaps and frictions in the broader ecosystem—such as inconsistent access to skilled labor, specialized technicians, and reliable supply chains for green technologies—further complicate the path to full-scale transformation. Overcoming these challenges will require coordinated actions among policymakers, financial institutions, technology providers, and business leaders.

Despite these hurdles, the overall trajectory is clear: Thai firms see sustainability as integral to their competitiveness and resilience. This perspective aligns with broader regional and global trends that increasingly reward sustainable supply chains, lower emissions footprints, and transparent governance practices. In practice, sustainability initiatives intersect with digital transformation in important ways. For instance, the integration of energy management systems, smart manufacturing automation, and data-driven optimization can deliver both environmental benefits and cost savings, reinforcing the business case for investment even in a higher-cost environment. Thai firms are recognizing that sustainability is not only about reducing carbon footprints but also about improving resource efficiency, product quality, and customer trust—thereby enabling better pricing power and demand stability in markets sensitive to sustainability credentials.

From a sectoral standpoint, tourism presents a particularly fertile ground for sustainability-led growth. The tourism industry, a cornerstone of Thailand’s economy, can pivot toward wellness-oriented and premium service offerings that align with rising consumer expectations for sustainable, healthy, and high-value experiences. By emphasizing responsible tourism practices, sustainable supply chains for food and accommodations, and partnerships with local communities to preserve cultural and environmental assets, tourism can evolve into a high-margin, resilience-driven growth engine even amid tariff-related pressures. The capacity to offer differentiated experiences—whether through eco-conscious accommodations, wellness retreats, or culturally rich itineraries—can help Thai tourism compete effectively in a global market where sustainability considerations increasingly shape consumer choices.

Digitalization remains a critical enabler of sustainability and resilience. The UOB study shows that more than two-thirds of firms expect faster adoption of digital tools in the near term, reflecting a strong belief that digital solutions will amplify the impact of sustainability programs, improve operational visibility, and facilitate data-driven decision-making. The integration of digital tools across operations—ranging from advanced analytics and cloud-based platforms to automated quality controls and supply chain traceability—can help firms optimize production, reduce waste, and respond more rapidly to tariff-driven price shifts. For SMEs, digital adoption offers a path to greater competitiveness that can offset cost pressures and enhance access to new customers and markets. The challenge remains to close the gap between intention and execution by addressing affordability, skills development, and the availability of scalable, SME-friendly solutions.

In parallel with these shifts, the Thai government and financial institutions are expected to continue supporting sustainability-oriented investments through a mix of policy incentives, financing options, and advisory services. The broader emphasis on sustainable finance aligns with both the tariff-driven imperative for efficiency and the longer-term goal of positioning Thailand as a hub for green industry and high-value manufacturing. For SMEs, such support can unlock the capital needed for efficiency retrofits, digital upgrades, energy storage solutions, and smarter product design, enabling them to compete more effectively in a market where sustainability credentials carry increasing weight in procurement decisions and consumer preference.

Strategically, firms that embrace sustainability as a core business platform—coupled with targeted digital transformation—stand to gain not only resilience to tariff shocks but also enhanced competitiveness, access to favorable financing terms, and stronger relationships with international customers who are prioritizing ESG performance. This approach can yield a virtuous cycle: more efficient operations lower costs, better product quality and responsible sourcing drive demand from premium markets, and sustainable finance channels provide the capital required to sustain investment over the long term. In a world of evolving tariffs and climate-conscious consumer bases, such a strategy positions Thailand’s economy to capitalize on opportunities arising from both regulation and consumer expectations, while maintaining a steady course toward higher value-added production, export diversification, and inclusive growth.

Policy Trends and Global Market Dynamics

The global regulatory landscape is undergoing rapid evolution, with European Union rules on sustainable supply chains and tariffs on carbon-intensive imports shaping how Thai products enter major markets. The EU’s Corporate Sustainability Due Diligence Directive (CS3D) requires rigorous human rights and environmental due diligence across supply chains. In practice, this means Thai exporters must demonstrate robust oversight of supplier practices and environmental impacts to maintain access to EU markets. Parallel to this is the Carbon Border Adjustment Mechanism (CBAM), which taxes carbon-intensive imports to incentivize decarbonization among trading partners. Together, these measures are expected to elevate the compliance burden for Thai exporters and raise the importance of sustainable supply chain management as a precondition for market access in Europe. This regulatory regime reinforces the imperative for early adoption of sustainability practices as a strategic necessity rather than a future option, encouraging Thai firms to implement end-to-end due diligence, carbon accounting, and supplier collaboration to ensure eligibility for key European markets.

Beyond Europe, global policy trends are reinforcing the shift toward green, transparent, and resilient supply chains. The tariff landscape in the United States remains a central focal point for Thai exporters, given the country’s long-standing role as a major destination for Thai goods. The combination of tariff risk, potential retaliation, and shifting demand patterns creates a complex set of considerations for firms planning production and logistics. Corporate strategies are increasingly aligned with these dynamics, emphasizing diversification, near-shoring of certain activities, and the creation of flexible supply chains capable of withstanding tariff volatility. In this context, Thai policymakers face the challenge of balancing trade facilitation with sustainability mandates, while also ensuring that domestic industries have channels to adapt to evolving buyer expectations and regulatory frameworks.

Thai industry stakeholders also note a broader set of policy moves aimed at balancing trade with the United States and other markets. The government has discussed strategies to increase imports of US goods as a way to balance trade, including agricultural products, liquefied natural gas, and Boeing aircraft. This approach, while potentially beneficial for addressing trade imbalances, emphasizes the need for Thai firms to plan for a more diversified and resilient trade portfolio rather than a single-market concentration. In parallel, there are indications of plans to expand Thai investment in the US, particularly in energy-related products such as the Alaska gas initiative. Such strategic dialogues reflect a recognition that fostering closer economic ties with the United States could yield long-term benefits, while also underscoring the necessity for Thai exporters to maintain flexibility and pursue multiple growth avenues to avoid overreliance on any one market.

Amid these global shifts, SMEs in Thailand are actively exploring new markets and product diversification as a hedge against tariff risk. A common strategic theme is the move away from sole reliance on food exports for human consumption toward pet food and other value-added categories. This shift reflects a broader trend of market diversification and product differentiation that can help cushion the impact of tariff changes by expanding revenue streams and reducing exposure to any single regulatory regime. As firms reframe supply chains and explore new product lines, the role of sustainability and digital transformation remains central. The ability to demonstrate sustainable sourcing, emissions reductions, and responsible innovation is increasingly a differentiator in global procurement decisions, informing buyers about risk profiles and long-term reliability. In this climate, Thai SMEs and larger firms alike are prioritizing investments in sustainable practices, precision manufacturing, and advanced analytics to enhance competitiveness and resilience.

The Role of Tourism and High-Value Services in a Tariff-Adjusted Economy

Tourism remains a cornerstone of Thailand’s economy, and policymakers and industry players recognize its unique potential to buffer the impact of tariff-driven shocks in other sectors. The sector’s capacity to pivot toward wellness-oriented experiences and premium service offerings positions it to capture higher value from domestic and international demand, even as tariffs reshape other export channels. A focus on sustainable, high-quality hospitality, wellness tourism, and premium experiences can differentiate Thailand in a crowded international tourism market. By investing in environmental stewardship, culturally sensitive experiences, and responsible tourism practices, the sector can maintain resilience and continue to contribute significantly to GDP and employment, even in the face of tariff pressures in manufacturing and industrial exports.

Wellness-focused tourism and premium, service-oriented offerings align with broader consumer trends toward health, well-being, and experiential consumption. Thai operators can emphasize sustainable accommodations, locally sourced cuisine with regenerative practices, and culturally enriching itineraries that respect local ecosystems and communities. This strategic pivot requires collaboration among hotels, travel operators, local communities, and government agencies to ensure that sustainable standards are accessible, verifiable, and scalable. When supported by transparent reporting, energy-efficient retrofits, and responsible supply chains, wellness tourism can command premium pricing and foster loyalty among visitors who prioritize sustainability in their travel choices.

The tourism segment’s resilience also intersects with digital transformation and customer experience optimization. The adoption of digital booking platforms, contactless services, and data-driven personalization can enhance guest satisfaction, optimize capacity, and better align offerings with changing demand patterns. In this context, domestic tourism development programs, cross-border marketing initiatives, and partnerships with international travel platforms can amplify Thailand’s appeal while reducing vulnerability to tariff-driven volatility in other sectors. By combining sustainability with superior guest experiences and smart operational practices, tourism can serve as a stabilizing engine that complements export-oriented industries and helps sustain employment and investment in the broader economy.

Strategic actions in the service and tourism spheres can be reinforced by financial institutions offering tailored financing and advisory services for sustainable hospitality, digital upgrades, and energy efficiency projects. Banks like UOB Thailand, in particular, can play a pivotal role by providing specialized products that support sustainability transitions, including green advisory services, project finance for energy upgrades, and working capital solutions designed to accommodate longer investment horizons. Such financing can accelerate the adoption of responsible tourism practices, energy optimization, and digital customer experiences—contributing to a more robust, diversified growth model that reduces reliance on any single economic channel.

Diversification, Market Access, and Strategic Partnerships

A recurring theme across sectors is the imperative to diversify markets beyond the United States and to pursue strategic partnerships that enhance resilience and growth. Thai firms are increasingly considering new markets and product lines to mitigate tariff-related risk and to tap into growing demand in regions with expanding purchasing power and rising middle classes. Diversification strategies can include expanding into neighboring regional markets, exploring opportunities in Southeast Asia, and reaching customers in Europe and other regions through sustainable supply chains and certified products that meet stringent environmental and social standards.

Strategic partnerships with global buyers, suppliers, and technology providers can also help Thai firms upgrade their capabilities and accelerate the adoption of sustainable manufacturing practices. Collaborations can enable access to advanced technology, capital for green investments, and support for R&D aimed at product differentiation and value-added manufacturing. In addition, Thailand’s business environment can benefit from public-private collaborations that align incentives for sustainable investment, such as tax incentives for energy efficiency, subsidies for digitalization, and support for R&D in high-value sectors. These partnerships are particularly valuable for SMEs, which often require scale, knowledge transfer, and access to global networks to overcome structural disadvantages.

In line with these strategic directions, Thai firms are increasingly pursuing education and skills development to close the digital and productivity gaps that can constrain competitiveness. The emphasis is on upgrading the workforce to meet the demands of modern, automated production, including training in robotics, data analytics, cybersecurity, and digital workflow management. By building human capital that complements capital investments, firms can accelerate their shift toward higher value-added production and better integration with sustainability and digital ecosystems. For SMEs, targeted training programs and government-supported upskilling initiatives can bridge critical gaps, enabling them to implement new technologies and adopt best practices that drive efficiency, quality, and compliance.

The role of government policy and regulatory alignment remains crucial in shaping Thailand’s path forward. Policymakers need to balance the imperative of sustainable, climate-friendly growth with the realities of a tariff-heavy external environment. Strategic measures may include streamlined customs procedures, clearer guidance on CS3D and CBAM compliance, and transitional support to help firms adjust to new reporting standards and decarbonization requirements. Additionally, policy frameworks that promote investment in digital infrastructure, R&D, and renewable energy can amplify private sector efforts, reduce costs, and accelerate the realization of a low-carbon, high-productivity economy. In this context, the collaboration among government agencies, financial institutions, and industry associations will be central to building a robust, inclusive, and future-proof economic system in Thailand.

Practical Implications for Thai Businesses and Actionable Steps

For Thai businesses, the convergence of tariff headwinds, sustainability expectations, and digital transformation pressures translates into a set of practical, near-term actions that can bolster resilience and growth. A first priority is to conduct a comprehensive tariff exposure assessment across product lines, customer segments, and markets. This involves mapping out the sensitivity of each product to tariff regimes, identifying critical suppliers and logistics pathways, and evaluating potential price transmission effects on end markets. The assessment should inform hedging strategies, sourcing diversification, and capacity-building plans, ensuring that firms have a clear view of where vulnerabilities lie and how to address them systematically.

A second priority is to advance sustainability-driven supply chain initiatives. Firms should implement end-to-end due diligence processes that align with CS3D expectations, establish traceability for key inputs, and collaborate with suppliers to improve environmental and social performance. This includes carbon accounting, setting reduction targets, and investing in energy efficiency improvements across production facilities. By embedding sustainability into procurement and product design, firms can enhance resilience, attract value-conscious buyers, and qualify for green finance and incentive programs that lower the cost of capital for sustainability projects.

A third priority is to accelerate digital transformation as a multiplier for efficiency and market reach. Investments in automation, data analytics, cloud-based operations, and digital customer engagement can yield substantial returns through productivity gains, reduced waste, and improved forecasting accuracy. SMEs, in particular, can benefit from modular, scalable digital solutions that fit their resource constraints. Public-private initiatives to expand digital infrastructure, provide affordable financing for technology adoption, and deliver targeted training can extend the benefits of digitalization across the SME ecosystem and strengthen national competitiveness.

A fourth area of focus is diversification and strategic market development. Firms should consider market-entry strategies that spread risk—not only by geographic diversification but also by product diversification and channel diversification. This could involve exploring demand for Thai pet nutrition products, value-added processed foods, and specialty goods with environmental certifications that appeal to sustainability-minded consumers and regulators. Strategic alliances with global buyers and technology partners can accelerate entry into new markets, enable knowledge transfer, and provide access to capital and distribution networks that may be out of reach for standalone firms.

Finally, finance remains a critical enabler of all these initiatives. Banks and financial institutions can support Thai firms by offering a continuum of financing options aligned with sustainability and digital objectives. This includes green loans, sustainability-linked loans, and project financing for energy efficiency and automation projects, as well as advisory services for risk management, supply chain finance, and capital budgeting for efficiency upgrades. For SMEs in particular, access to affordable and flexible funding can be the deciding factor in their ability to implement a broad transformation program that covers sustainability, digital tools, and product diversification.

UOB Thailand remains positioned to partner with Thai businesses throughout this transition. By delivering sustainable financial solutions, advisory services, and access to a broad ecosystem of partners, the bank is prepared to help clients build resilience, optimize operations, and capture opportunities arising from a changing global economy. The bank’s emphasis on sustainability reflects a recognition that responsible business practices are integral to long-term profitability and competitiveness, and its initiatives aim to empower Thai firms—especially SMEs—to navigate tariff shifts, embrace digital innovation, and adopt higher value-added strategies. In this way, financial institutions can act as catalysts for a more robust, sustainable, and globally connected Thai economy.

Conclusion

The evolving tariff landscape, coupled with the European Union’s sustainability regulations and the broader push toward decarbonization, is reshaping how Thai firms compete on the global stage. The Bank of Thailand’s projections of slower growth and a potential export contraction highlight the urgency for timely, strategic action across sectors, particularly within automotive, electrical appliances, and processed foods, as well as in the rubber, steel, and chemical supply chains that feed into US-bound production. SMEs face unique vulnerabilities, but they also possess substantial potential to adapt through productivity improvements, digital adoption, and a shift toward higher value-added products.

Sustainability and digital transformation emerge as central themes that can help firms weather tariff shocks while unlocking new growth opportunities. The UOB Business Outlook Study 2025 reinforces this message by showing a clear intent—across segments—to integrate sustainability into core business strategies and accelerate digitalization in the post-tariff period. While challenges persist, including high costs, infrastructure gaps, and the need for workforce upskilling, the pathway to resilience lies in coordinated action among businesses, banks, and policymakers. Diversifying markets, strengthening supply chains, and investing in sustainable and tech-enabled capabilities will position Thailand to maintain momentum in a more complex global economy.

Tourism and high-value services offer additional avenues to bolster growth and resilience. By leveraging wellness-focused, premium service experiences and sustainable practices, Thailand can diversify its economic base and cushion the impact of tariff-induced volatility elsewhere. The collaborative ecosystem—comprising industry players, financial partners, and government bodies—will be essential in sustaining progress toward a more sustainable, innovative, and globally competitive Thai economy. Through ongoing emphasis on sustainability, digitalization, and diversified growth, Thai businesses can navigate tariff headwinds while seizing opportunities to build a more resilient, productive, and prosperous future.