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.