Thailand: New 12.5% US Section 301 Tariff Takes Effect

Businesses trading between Thailand and the United States are facing another significant change in the tariff landscape.

On 24 July 2026, a new 12.5% Section 301 tariff took effect on most imports from Thailand into the United States. The measure replaces the temporary 10% Section 122 surcharge introduced earlier this year and follows a finding by the Office of the US Trade Representative (USTR) concerning Thailand’s treatment of imports involving forced labour.

For businesses, however, the significance of the change goes beyond the additional 12.5% duty.

Unlike the temporary measures that preceded it, the new tariff sits within the considerably more established Section 301 framework. This means companies importing Thai-origin goods into the United States may need to treat the additional duty as a longer-term feature of their commercial planning rather than another temporary tariff measure.

A rapidly changing tariff landscape

The current position follows an unusually fast series of changes in US trade policy.

Beginning in April 2025, the United States imposed wide-ranging tariffs under the International Emergency Economic Powers Act (IEEPA). Thailand faced a tariff rate of 36% under that regime.

The legal basis for those measures was subsequently challenged, and in February 2026 the US Supreme Court held that IEEPA did not authorise the President to impose tariffs.

The administration then turned to Section 122 of the Trade Act of 1974.

A 10% global surcharge came into effect on 24 February 2026, but Section 122 is inherently temporary: the legislation generally limits the surcharge to 15% and a duration of 150 days unless Congress authorises an extension.

With that measure due to expire in July, attention shifted to Section 301.

Why Section 301 matters

In March 2026, USTR initiated investigations into Thailand and a number of other major US trading partners concerning the absence of effective prohibitions on importing goods produced using forced labour.

USTR subsequently concluded that Thailand had not imposed and effectively enforced such a prohibition and that its practices burdened or restricted US commerce.

Following consultation and public hearings, a 12.5% additional tariff was imposed on Thailand with effect from 24 July 2026.

The change in statutory authority is important.

Section 301 does not contain the 15% ceiling or 150-day duration restriction applicable to Section 122. Although Section 301 measures are subject to statutory review and termination provisions, they can potentially remain in force considerably longer.

Businesses should therefore be cautious about treating the new 12.5% tariff as a short-term cost that will simply disappear in a few months.

Not every Thai product is affected in the same way

The additional tariff generally applies alongside the normal most-favoured-nation duties applicable to imported products.

There are, however, exclusions.

Certain goods and transactions are excluded under the implementing measures, including specified products already subject to Section 232 tariffs. Other product-specific exclusions may also apply.

Businesses should consequently avoid assuming that either all Thai products are caught or that an entire sector is exempt. The position needs to be considered at individual product and tariff-classification level.

There is also a separate mechanism relating to textiles under which certain tariff benefits may be available where US-origin textile inputs are used.

Another Section 301 investigation creates further uncertainty

The 12.5% tariff is not necessarily the end of the story.

Thailand is also included in a separate Section 301 investigation concerning structural excess manufacturing capacity.

This investigation is distinct from the forced-labour investigation responsible for the current tariff and potentially creates additional exposure, particularly for businesses operating in the automotive, rubber and machinery sectors.

If further measures are introduced following that investigation, affected Thai-origin goods could potentially face additional duties on top of the existing 12.5%.

Companies operating in these sectors should therefore be incorporating tariff risk into forward planning now rather than waiting for the investigation to conclude.

Thailand and the United States continue negotiations

Thailand has continued discussions with US authorities and sought both a reduction of the tariff from 12.5% to 10% and additional product exemptions.

Those efforts have not yet resulted in a reduction in the headline rate.

Negotiations are nevertheless continuing around an Agreement on Reciprocal Trade (ART), with Thailand seeking treatment comparable to countries including Malaysia and Indonesia.

Thailand is also pursuing domestic measures that could affect future negotiations, including proposals concerning human-rights due diligence and stronger procedures for verifying that exported goods have been produced without forced labour.

Even if agreement is reached with the United States, however, implementation would not necessarily be immediate. Any ART would still need to pass through Thailand’s domestic approval procedures.

Businesses should therefore plan around the rules currently in force rather than assuming negotiations will result in an imminent reduction in tariffs.

What should businesses be doing now?

For companies manufacturing in Thailand, exporting Thai products or importing those products into the United States, the immediate priority should be understanding exactly where the financial and compliance exposure sits.

Importers should review the Harmonized Tariff Schedule classifications applicable to their products, existing MFN duties and the availability of any product-specific exclusions.

Country-of-origin documentation also deserves particular attention, especially where goods manufactured in Thailand contain materials or components sourced from China or other jurisdictions.

Supply-chain traceability is increasingly important. Businesses should be able to demonstrate how and where goods and components have been produced and should review their procedures for identifying and addressing forced-labour risks within their supply chains.

Commercial contracts should also be reviewed.

Provisions dealing with Delivered Duty Paid (DDP) arrangements, allocation of customs duties, tariff adjustments and changes in law can determine which party ultimately bears a significant additional cost.

Finally, companies may wish to review their customs planning more broadly. Depending on the circumstances, classification, valuation and origin analysis — together with mechanisms such as first-sale valuation or obtaining a binding US Customs and Border Protection ruling — may provide greater certainty or identify legitimate opportunities to manage customs costs.

The wider lesson for international businesses

The recent history of US tariffs on Thailand illustrates a broader challenge facing businesses operating across international supply chains.

Tariff policy is increasingly interconnected with labour standards, human rights, industrial policy, national security and geopolitical concerns.

For companies, customs planning can therefore no longer be treated simply as an administrative function undertaken when goods reach the border.

Businesses need to understand where their products originate, how their supply chains operate, which contractual party bears additional duties and how regulatory or trade-policy changes could affect future costs.

For businesses operating between Thailand and the United States, the 12.5% Section 301 tariff should currently be treated as part of that longer-term commercial environment.

At the same time, continuing US-Thailand negotiations and the separate investigation into structural excess manufacturing capacity mean the position remains fluid.

Companies with significant exposure should continue monitoring developments closely and ensure that their customs, contractual and supply-chain arrangements are sufficiently robust to respond to further changes.

By Tilleke & Gibbins, Thailand, a Transatlantic Law International affiliated firm. 

For further information or for any assistance please contact thailand@transatlanticlaw.com

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 84 Brook Street, London W1K 5EH, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.