Thailand, along with other Southeast Asian countries, received a temporary respite when U.S. President Donald Trump decided to delay the implementation of his “Liberation Day” tariffs by 90 days. As a result, U.S.-bound exports from Thailand now face a 10% tariff, significantly reduced from the initially threatened 36% by Trump.
Asian markets have experienced volatility since Trump announced his reciprocal tariffs on April 2, with corresponding fluctuations in market indices. Thailand’s benchmark SET index fell by 9% between April 2 and April 9 but saw a recovery following Trump’s announcement of the tariff pause. Despite this, the index has not fully rebounded from the “Liberation Day” impact.
Victor Cheng, CEO of Delta Electronics Thailand, remarked before the tariff pause that the reciprocal tariffs seemed excessively high. U.S. actions were causing anxiety and concern, he stated, but customers had not yet altered or canceled orders, choosing instead to adopt a wait-and-see approach. After Trump paused the tariffs, Cheng observed that customers were using the 90-day period to increase their stock.
Cheng clarified that U.S. customers, rather than his company, would bear the additional tariff on top of the original selling price, as most of Delta Electronics Thailand’s products are classified as “free on board”—meaning that the responsibility transfers from the seller to the buyer. The question of who pays tariffs is a significant topic in discussions around Trump’s trade policies, with claims that foreign entities pay the tariffs. However, trade experts indicate it is the importer that absorbs the cost, potentially passing it to consumers. Large importers, like Walmart, might negotiate for concessions from foreign suppliers.
Nonetheless, Cheng expressed concerns that steep U.S. tariffs might indirectly affect his company by imposing additional burdens on customers and fueling inflationary pressures. He noted that any tariffs above 15% could disrupt business significantly.
Following “Liberation Day,” Thailand’s government engaged with industry associations and businesses to assess tariff impacts. Cheng predicted that Thailand would reduce tariffs on U.S. goods, increase purchases of U.S. commodities, and collaborate with Southeast Asian countries to negotiate with the U.S. as a united front. The Thai government announced plans to send a delegation to the U.S. for trade negotiations the following week.
Delta Electronics Thailand manufactures and distributes electronics, particularly power components used in products like electric vehicles and data centers. While it collaborates with European and U.S. carmakers, it is exploring partnerships with Chinese EV manufacturers that have established facilities in Thailand.
EV adoption is rising in nations such as Thailand, Malaysia, and Singapore, driven partly by government incentives and the availability of affordable Chinese-made vehicles. The Southeast Asian market appeals to Chinese carmakers due to its proximity to China and its favorable policy stance. In Singapore, electric vehicles constituted 33.6% of new car registrations last year, an 18% increase from 2023. In Malaysia, EV sales jumped 19% to over 45,000, while Indonesia saw sales more than double to reach 43,000 units.
Cheng is optimistic about Delta Electronics Thailand’s potential to tap into this growing demand, citing increasing sales of EV chargers in the region. Regarding the data center business, the company noted that U.S. companies comprise a significant client base, with Nvidia being specifically mentioned.
Delta Electronics Thailand, a subsidiary of the Taiwanese electronics manufacturer Delta Electronics, benefited from the booming EV industry, which contributed to increased revenues, profits, and share values. At one point, the subsidiary’s valuation exceeded that of its parent company and maintained a peak market value of approximately $64.1 billion last November. However, the company’s share price has since declined, losing more than 50% of its value since the November peak, while the SET index fell by over 27% in the same period.
In March, equity research analyst Yugi Takeshima from Maybank Securities cautioned that rising costs and uncertainties around a new global minimum tax on corporate earnings could hinder growth. The intended purpose of the global minimum tax is to deter companies from excessively booking profits in low-tax regions.
Last year, Delta Electronics Thailand was subject to a 5.5% tax, which increased to 15% this year when Thailand imposed a “top-up” tax to align with entry into the Organisation for Economic Co-operation and Development. Cheng has acknowledged that Delta Electronics Thailand’s share prices might have been overvalued, referring to an inflated price-to-earnings ratio. He emphasized a focus on business fundamentals amid the tariff situation, noting healthy revenue levels and continued year-on-year growth. Revenue for 2024 reached 164.7 billion baht ($4.9 billion), an increase of 12.5% from the previous year, largely driven by the Mobility Group (EV) segment. Despite a moderation in EV growth, Cheng remains positive on AI-related infrastructure, with expectations for double-digit revenue growth fueled by investments.
In a conversation, Cheng highlighted that AI development presents a significant opportunity for revenue support and potential profit benefits for the company.
