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Business leader standing in front of national flags during an official event.
Business leader standing in front of national flags during an official event.
Business leader standing in front of national flags during an official event.

Thailand’s Time: Why Now Is the Critical Moment to Shift Manufacturing Out of China

Apr 29, 2025

Thailand Sourcing Editorial Team

5 min to read

Navigating the Complex Political Landscape

The global manufacturing landscape is undergoing rapid and profound change. As geopolitical tensions escalate and trade dynamics continue to evolve, companies are reevaluating their dependency on China—not just as a strategic move, but as a matter of urgency.

At Thailand Sourcing Services (TSS), we’ve been assisting businesses in shifting their operations from China to Thailand and Vietnam for over a decade. Today, this transition is no longer a long-term consideration—it’s an immediate necessity.

Tariffs Are Accelerating the Transition

Recent developments, including former President Trump’s announcement of a proposed 38% tariff on Thai imports, have raised concerns. However, the broader context tells a more urgent story:

  • Chinese goods are already subject to tariffs reaching up to 149%, depending on the product category.

  • The proposed Thai tariff is not yet in effect and is delayed until at least June.

  • It is widely expected to be lowered, provided that Thailand takes measurable steps to address U.S. trade concerns.

These concerns include increasing imports of U.S. goods, reducing the 7% VAT on U.S. imports, curbing Chinese transshipment through Thailand, and taking action against dumping practices involving Chinese-controlled goods. If the Thai government acts swiftly and strategically, the final tariff figure could be significantly less than the proposed 38%.

A Familiar Pattern Is Reemerging

We’ve seen similar trends before. Between 2018 and 2019, when the U.S. imposed 25% tariffs on Chinese goods, Thailand experienced a wave of manufacturing relocations. TSS played a critical role in helping clients move quickly and efficiently—resulting in lower costs and improved supply chain stability.

When higher tariffs of up to 60% were discussed, companies began to plan their exits. Now that tariffs on some Chinese products have climbed beyond 100%, the shift away from China is no longer hypothetical—it’s already underway.

Thailand’s Capacity Has Its Limits

Despite its strategic advantages, Thailand cannot accommodate the entire wave of manufacturers looking to relocate. Based on our assessments, only about 20% of the production capacity shifting out of China can be realistically absorbed by Thailand. As a result:

  • Industrial parks are reaching capacity

  • Factory selection processes are taking longer

  • Top suppliers are quickly becoming overbooked

  • Prices and lead times are beginning to rise

The window of opportunity is open—but it’s narrowing fast.

TSS Is Here to Guide Your Transition

At Thailand Sourcing Services, we offer comprehensive, on-the-ground support to ensure a seamless manufacturing relocation. Our services include:

  • Identifying and validating qualified suppliers in Thailand and Vietnam

  • Setting up production lines and end-to-end supply chains

  • Navigating regulatory requirements and ensuring full compliance

  • Organizing business travel, accommodations, and local logistics

  • Mitigating risks associated with Chinese transshipment or indirect ownership

Whether your goal is partial diversification or full relocation, our team is equipped with the expertise and local knowledge to make it happen—efficiently and without costly missteps.

TSS Is Here to Guide Your Transition

The current market conditions represent a narrow but critical window for action. As more companies begin the relocation process, options will diminish, and operational costs will inevitably increase.

If your company is exploring alternatives to China, the time to move is now.

Let’s talk—and let us help you secure a stronger, more resilient supply chain for the future.

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Are you interested in what we offer? Then fill out the RFQ and we will get back to you!

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Are you interested in what we offer? Then fill out the RFQ and we will get back to you!

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TOUCH