Thai clothing manufacturers call for postponement of minimum wage increase due to 29% US import tax increase.
The Thai garment industry, once a leading export sector, is currently grappling with a series of setbacks. Labour and raw material expenses make up 60-70% of total production costs for garment manufacturers, leaving little room for manoeuvre in the face of new obstacles.
One such challenge is the import tariffs that have been imposed. The United States, which accounts for approximately 40% of Thailand's garment exports, has increased the import tariff on Thai garments from an average of 10% to 29%. This new tariff poses a significant threat to this key market. Japan, the second largest buyer of Thai garments, also imposes tariffs averaging 10-20% on various garment types.
The Thai garment industry is still recovering from the COVID-19 impact, and these tariffs could further hinder its progress. Yosthon Kitkuson, the President of the Thai Garment Manufacturers Association (TGMA) and the Chair of the Textile and Garment Trade Association under the Thai Chamber of Commerce, has called on Thailand's new government to accelerate negotiations for a Thailand-European Union Free Trade Agreement (FTA).
Securing an FTA with the EU could open up trade with 27 countries, potentially offsetting potential losses in the US market. However, as of September 2025, there are no current publicly available details naming specific Thai government officials involved in negotiations for a Thailand-European Union free trade agreement.
The purpose of accelerating the FTA negotiations is to help mitigate the competitive disadvantage against Vietnam, which already has an FTA with the EU. The garment industry is a labor-intensive sector, employing over 1 million workers, and any measures taken to support it are crucial for sustaining growth and maintaining competitiveness.
Rising wages could also disproportionately affect new and unskilled workers, increasing costs for employers. Currently, the industry is recovering from the COVID-19 impact, and any additional burden could exacerbate the challenges it faces.
The sector emphasizes that timely government support, including wage policy management and international trade agreements, is crucial for its future. As the Thai garment industry navigates these difficulties, it continues to play a vital role in the country's economy.
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