You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

October 20, 2025

Thailand’s Role in Global Trade: Rules of Origin and Transshipment Tariffs

Subscribe to Updates

Global trade has become an everyday issue with immense effects on trade and the economy. Today’s global trade climate sees countries around the world engaged in trade negotiations aspiring to eliminate trade barriers. Customs tariffs and associated privileges are among the issues that most impact global trade flows and the import-export sector.

Thailand has negotiated customs tariff privileges as part of its 14 free trade agreements (FTAs) with 18 countries, including six bilateral and eight regional agreements. These FTAs set forth criteria for member states to comply with and adopt into national law. To achieve customs privileges, one of the most important criteria is rules of origin, which indicate the originating country of imported or exported goods and the accompanying duty rates or privileges for reduction or exemption.

Rules of Origin Under FTAs

The rules of origin mapped out in FTAs allow for duty exemptions or rate reductions based on the determination of goods’ country of origin. This largely includes two main categories:

  • Wholly obtained (WO) means the product was entirely produced in a single originating country and does not include any foreign (non-originating) content or manufacturing process.
  • Product specific rules (PSR) are detailed criteria that define how each product’s origin is determined. PSR criteria that are often found in FTAs include “change in tariff classification” (determining origin based on sufficient transformation of materials), “regional value content” (requiring a minimum percentage of value to be added locally), and specific manufacturing or processing operations (mandating particular production steps occur in the originating country). These criteria also extend to cover other subordinated methods of verification, such as accumulation rules and de minimis rules, to provide more flexibility for the establishment of origins and tariff privileges under such FTAs.

Compliance Challenges

Despite attempts to promote international trade and eliminate trade barriers through the establishment of FTAs, importers and exporters nevertheless face difficulties or disputes arising from FTAs, especially disputes concerning the origin of goods either at the time of importation/exportation or through the process of postclearance audit by customs officers. If imported goods are not originating goods as declared, the importer is subject to additional duty assessment. Declaration of non-originating goods as originating goods may constitute a criminal offense, such as false declaration to avoid duty payment.

Hence, it is of utmost importance that entrepreneurs understand and are aware of the criteria of rules of origin and associated procedural aspects, including requirements for certificates of origin, document retention periods, and dispute resolution mechanism pertaining to Customs disputes.

Thailand and US Reciprocal Tariffs

Tariff privileges have been a vital issue in the international trade arena and have continuously been pivotal points in trade negotiations. A prominent global issue that has been headlined worldwide this year is the “reciprocal tariff” regime executed by US President Donald Trump’s administration, which imposed significantly high and controversial tariff rates on nations trading with the US, which has been criticized as a trade barrier. For Thailand, the tariff was initially imposed at a rate of 36% and has since been reduced to 19% following a series of negotiations and tradeoffs between nations.

However, although the reciprocal tariff rate now appears settled, the US is still pursuing further agreements on “transshipment tariffs,” as this would likely prevent other countries, particularly China, from using supply chains in other countries to disguise products’ country of origin to benefit from lower tariffs or circumvent trade restrictions.

Thailand’s Transshipment Scrutiny

Pursuant to recent negotiations with the US, Thailand is being scrutinized regarding its transshipment practices, especially concerning the exportation of goods actually originating from China as “made in Thailand” with nominal or no local content added from Thai manufacturers. This practice occurs because the goods would encounter higher tariff rates if exported directly from China to the US.

To facilitate negotiations, Thailand has reportedly planned to set up a special task force to manage issues concerning certificates of origin, which are expected to be required under new trade rules being negotiated with the U.S.

While the agreed criteria for transshipment are still not well settled, it can be expected that transshipment practices will be more thoroughly tested and verified for goods being shipped to the US.

Conclusion

Based upon FTAs and the prospective rules on transshipment tariff classification, rules of origin and associated documentation such as certificates of origin are crucial considerations for entrepreneurs who wish to enjoy tariff privileges and prevent risks of higher tariff exposure. Thailand’s experience demonstrates how geopolitical trade tensions can quickly reshape compliance requirements for businesses operating in global supply chains. As transshipment rules continue to evolve, companies should regularly review their origin determinations and supply chain structures to ensure continued compliance and market access.

Related Professionals

Practices

Customs and International Trade

Location

RELATED INSIGHTS​ 

July 21, 2026
On July 6, 2026, Myanmar’s Ministry of Finance and Revenue introduced revised procedures governing the importation and exportation of goods and vehicles, replacing the framework that had been in place since 2017. The revised procedures were introduced in Notification No. 115/2026, which establishes updated compliance requirements and penalties for importers and exporters, covering licensing, declarations, product specifications, prior arrival of goods, and imports or exports made without the required licenses or permits. Scope Unlike its predecessor (Notification No. 6/2017), which focused primarily on import-related noncompliance, the new notification regulates both import and export activities and introduces a separate penalty schedule for export violations. Exporters are now required to ensure that their exports comply with the approvals stated in export licenses and permits, match the information declared in export declarations, and are supported by the required licenses, permits, and accompanying documents. Import Compliance and Penalties The new notification imposes several compliance requirements on importers. Importers must ensure that the country of origin, branding, labeling, and other product information are consistent with the relevant import license or permit, import declaration, and the imported goods. For vehicles and machinery, the model year must match the year approved by the Ministry of Commerce. Importers must also ensure that goods are not imported before the issuance or after the expiry of the import license or permit, and that the imported quantity does not exceed the approved amount. Failure to comply with these requirements may result in regulatory action. As for the notification’s revised penalties for noncompliance with import licensing requirements, imports made without the required import license, permit, or import declaration may be subject to fines ranging from one to three times the assessable value (AV) of the goods, depending on the category of goods involved. Certain vehicles and machinery, as well as specific
Read More
May 22, 2026
Thailand recently concluded the latest round of high-level trade discussions with its US trade counterparts. In addition to addressing concerns over claimed human rights abuses, forced labor, and the current trade imbalance with the US, one critical area of focus was US allegations of transshipment in Thailand’s import-export sector. Transshipment is the practice of routing goods through a third country to circumvent duties or tariffs on goods exported to the receiving country. Specifically, the US alleges that many Thai exporters declare a Thai origin for goods to qualify for preferential duties or exemptions without meeting the legal standards for establishing Thai product origin—an act that it claims masks the goods’ true origin. This is a particular matter of concern for US authorities, since transshipment is perceived to be a means by which Thai origin is claimed for many Chinese goods exported abroad. This perception affects a wide range of otherwise legitimate Thai-origin goods. The Thai trade delegation, led by Deputy Prime Minister and Commerce Minister Suphajee Suthumpun, met with counterparts from the Office of the United States Trade Representative (USTR) on May 3–6. A subsequent team of Thai trade representatives, led by the Thai Ministry of Commerce vice minister, met with the USTR on May 13–14. These discussions directly impact the trade enforcement environment in Thailand, potentially affecting numerous business operators involved in the manufacture, import, or export of goods and components. Thailand’s position is that it strictly adheres to and enforces the legal standards for determining qualifying origin and that allegations of transshipment are largely unjustified. Nonetheless, it has agreed to increase its focus on trade compliance and enforcement in Thailand in return for commitments on reciprocal trade benefits with the US, including consideration of tariff exemptions on certain critical Thai imports into the US. Notable Outcomes There
Read More
May 8, 2026
The global trade environment for Thai exporters in 2026 has shifted significantly. Recent enforcement developments in both the United States and the European Union show a clear shift in trade policy: regulators are no longer focused solely on tariff levels, but also on whether products genuinely originate where exporters claim they do. Adding to this complexity, the US Supreme Court’s February 2026 decision striking down the use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs has upended the legal basis for a major pillar of US tariff policy, creating significant legal and commercial uncertainty for exporters worldwide, including in Thailand. For Thai companies integrated into regional supply chains, this change carries material implications. Although the IEEPA-based US reciprocal tariffs have been struck down, intensified circumvention enforcement continues under separate legal authorities, and the administration has signaled its intent to reimpose tariffs under alternative statutory frameworks, while EU authorities are using anti-circumvention investigations where trade patterns shift. In both jurisdictions, the decisive issue is whether manufacturing in Thailand constitutes substantial transformation under applicable rules of origin. Such origin determinations increasingly drive duty exposure, audit risk and commercial disputes. In 2026, the ability to defend a product’s Thai origin is not merely a procedural step, it is central to preserving market access in the US and EU. Impact Of US Circumvention Enforcement and an Uncertain Tariff Landscape Following the 2025 Framework for an Agreement on Reciprocal Trade, Thailand saw a shift in its tariff relationship with the US. A substantial range of Thai-origin goods were subject to a 19% reciprocal tariff under the IEEPA. However, the Supreme Court’s ruling invalidating the use of IEEPA for tariffs has removed the legal basis for that rate. The Administration has indicated it intends to pursue replacement tariffs under other statutory authorities,
Read More
April 9, 2026
In March 2026, the United States Trade Representative (USTR) initiated two significant investigations under Section 301(b) of the Trade Act of 1974 that directly affect Thailand. The first investigation examines overproduction in manufacturing sectors caused by government support or policies that distort normal market conditions across 16 economies, including Thailand. The second investigation, launched the following day, targets 60 economies, also including Thailand, for alleged failures to impose and effectively enforce prohibitions on the importation of goods produced with forced labor. Taken together, these investigations represent a significant escalation in US trade enforcement and create substantial risk for Thai exporters, manufacturers, and businesses with supply chain connections to the United States. The investigations are moving on an accelerated timeline, with the USTR indicating that potential trade measures, including tariffs, could be imposed as early as July 2026. This article provides an overview of the investigations, highlights their specific implications for Thailand, and outlines practical considerations for affected businesses. Section 301 as a Trade Enforcement Tool Section 301 of the Trade Act of 1974 gives the USTR authority to investigate foreign acts, policies, or practices that are considered unreasonable or discriminatory and that burden or restrict US commerce. If the USTR concludes that such practices exist, the statute allows a wide range of remedial measures, including the imposition of tariffs, nontariff trade restrictions, and negotiated agreements with foreign governments. Unlike other trade authorities, Section 301 does not set limits on the level of tariffs or the duration of measures, giving the USTR considerable flexibility to address perceived trade imbalances or unfair practices. Historically, Section 301 investigations take up to a year to complete. In this instance, however, the USTR has indicated that the investigations will proceed on a much faster timetable, with an unofficial target of concluding by July 2026.
Read More