Thailand’s Board of Investment (BoI) has announced strategic measures to help local manufacturers navigate the growing trade tensions with the US. In response to newly imposed US tariffs, the BoI has ceased promotional incentives for solar panel production, citing the industry's vulnerability to trade shifts and lack of technological advancement.
Image for representational purpose
According to Narit Therdsteerasukdi, Secretary General of the BoI, the decision is part of an effort to focus support on higher-tech sectors. Instead of promoting full photovoltaic (PV) panel assembly, the BoI is now encouraging investment in components such as aluminium frames, tempered glass, and silicon solar cells. These component manufacturers continue to benefit from corporate tax breaks and import duty exemptions for materials used in export-bound solar modules.
The move follows Washington’s imposition of punitive tariffs between 375 per cent and 3,521 per cent on solar panels from Thailand, Cambodia, Vietnam, and Malaysia in response to findings of dumping and subsidy-linked pricing by Chinese-backed firms operating regionally.
Indonesia’s aluminium sector faces tariff headwinds
Indonesia is under pressure from the US’s 2025 “reciprocal tariff” policy. Initially hit with a 32 per cent tariff, the rate was temporarily lowered to 19 per cent amid ongoing negotiations. However, failure to finalise a trade agreement by the August 1 deadline could trigger tariffs of up to 50 per cent, particularly affecting industrial exports like aluminium frames, extrusions, and construction materials.
State-owned smelter PT Inalum, which exported roughly 30,000 tonnes of aluminium to the US annually, is already redirecting output to regional markets due to cost pressures. Broader manufacturing sectors, electronics, solar components, packaging, and furniture are also feeling the strain as US tariffs dampen competitiveness and reduce aluminium demand.
With the deadline approaching, both nations are accelerating diplomatic efforts to protect vulnerable industries and mitigate further disruption to their export economies.
US and Thailand tariff situation
Thailand’s aluminium industry is also facing major challenges following a recent US tariff increase. In March 2025, the US raised import duties on Thai aluminium products, from 10 per cent to 25 per cent, citing national security concerns. This hike has made Thai exports like aluminium foil and thin sheets more expensive and less competitive in the US market.
The Federation of Thai Industries (FTI) warns that these tariffs could cost Thailand up to USD 25.8 billion in revenue, severely impacting key sectors such as automotive, food processing, plastics, chemicals, and aluminium. In response, the Thai government is considering eliminating tariffs on additional US imports and is preparing a 200 billion baht (USD 6.1 billion) soft loan package to support industries affected by the trade measures.
Responses
