Rocky Year Ahead: Thai Auto Parts Makers Face New Tariffs in 2026

Thai auto parts makers could face a rough 2026 as Mexico, a key car assembler, now imposes tariffs on goods, including car components, from countries without free trade agreements (FTAs). "We are gathering data to see how much the manufacturers and exporters will be affected," said Suphot Sukphisarn, secretary of the Cluster of FTI Future Mobility-ONE, a unit under the Federation of Thai Industries (FTI) that supports the local auto industry. Many parts manufacturers export products to pickup factories in Mexico where vehicles are assembled and exported to the US. According to media reports, Mexico has imposed tariffs ranging from 5% to 50% on goods from non-FTA countries starting Jan 1. The levies apply to more than 1,000 tariff lines and are expected to affect daily-use products and industrial inputs, with auto parts facing the highest rates. Auto parts makers are likely to face import taxes of 25-35%, depending on the parts. Rates can increase to 38% if the most favoured nation tax of 2-3% is included. "We expect to determine the scale of the impact on auto parts companies by the end of this month," said Mr Suphot. "We need time as this is a new issue." According to the FTI, there are roughly 1,700 auto parts manufacturers in Thailand. Most of them are small and medium-sized original equipment manufacturers, categorised as Tier 2 and Tier 3 in the auto parts supply chain. Auto parts producers in Tier 1 are usually subsidiaries of global car companies. He said he expects Mexico's new tariffs will deal a blow to the competitiveness of parts exporters, putting them at a disadvantage compared with rivals in Europe such as Poland and the Czech Republic. The tariffs could lead to investment changes in the global auto industry, said Mr Suphot. Car companies may allocate a greater investment budget to India and Indonesia, which are large car markets, he said. "We have observed a new investment trend in these two countries," said Mr Suphot. The impact could send ripple effects across the global automotive supply chain, with relocation of production facilities and shifts in investment strategy likely, he said. For Thailand, Mexican tariffs is yet another issue waiting solutions from a new government. "We need a Team Thailand to negotiate with Mexico," said Mr Suphot.