Thailand, along with the rest of Southeast Asia, got some temporary relief when U.S. President Donald Trump chose to delay his “Liberation Day” tariffs by 90 days. Now, the country’s U.S.-bound exports only have a 10% tariff, as opposed to the 36% threatened by Trump.
Asian markets have gone on a wild ride since Trump first unveiled his reciprocal tariffs on April 2, falling and rising according to the president’s statements. Thailand’s benchmark SET index fell by 9% between April 2 and April 9, only to rally after Trump announced his tariff pause. Still, the index has yet to recover from the Liberation Day hit.
“Reciprocal tariffs, we thought, were excessively high,” said Victor Cheng, the CEO of Delta Electronics Thailand, last week before Trump announced his tariff pause.
U.S. actions were causing “anxiety and great concern,” Cheng said, but noted that customers had yet to change or cancel any orders as a result of the tariffs and were instead adopting a wait-and-see attitude. Cheng added later, after Trump paused his tariffs, that customers are using the 90-day pause on reciprocal tariffs to “stock up.”
The CEO also explained why his U.S. customers, and not his company, “will have to bear the extra tariff on top of the original selling price.” He points out that most of Delta Electronics Thailand’s products are classed as “free on board,” which means responsibility passes from the seller—his company—to the buyer—the U.S. customer.
Who pays for tariffs is a major political point in the debate around Trump’s trade policy, with the president and his supporters claiming that the foreign government or company pays for the tariffs. Most trade professionals note that, in fact, it’s the importer that pays: It may then pass some, if not all, of the extra cost to end-consumers. (Large importers, like Walmart, might also be able to force foreign suppliers to take a haircut on price.)
Still, Cheng was concerned that steep U.S. tariffs would still indirectly affect his company, by placing additional burdens on his customers and spurring inflationary pressures.
“Tariffs will definitely have some impact. A mild level will be okay … but high tariffs beyond 15% will be difficult to take by any single party and will cause disruption,” Cheng said in a follow-up conversation after Trump’s tariff pause.
Cheng noted that, in the days since Liberation Day, Thailand’s government had reached out to industry associations and individual companies to understand how tariffs would affect their business. He predicted that Thailand will lower tariffs on U.S. goods and purchase more U.S. commodities, while coordinating with its fellow Southeast Asian governments to negotiate with the U.S. as a bloc.
Thailand will send a delegation to the U.S. to start trade negotiations next week, the government said on Monday.
Focusing on EVs and data centers
Delta Electronics Thailand makes and distributes electronics, namely power components, that are used anywhere from electric vehicles to data centers. The company currently works with European and U.S.-based carmakers, but Cheng said Delta Electronics Thailand is starting to explore working with Chinese EV makers that have set up manufacturing capacity in Thailand.
EV adoption is growing in countries like Thailand, Malaysia, and Singapore, in part owing to government incentives and the debut of affordable Chinese-made cars. Southeast Asia is proving to be an attractive market for Chinese carmakers, because of its proximity to China and its more Beijing-friendly policy stance.
Electric cars made up 33.6% of all new car registrations in Singapore last year, up from 18% in 2023, according to government data. In neighboring Malaysia, EV sales jumped 19% to break 45,000; EV sales more than doubled in Indonesia to reach 43,000 units.
Cheng was optimistic that Delta Electronics Thailand was going to be able to tap into that expanding demand.
“Here in Southeast Asia, we’ve seen some success with EV chargers. We’re seeing the sales of that—whether it’s AC or DC—gradually growing here,” Cheng explained.
Regarding its data center business, Delta Electronics Thailand said U.S. companies are a significant customer base but declined to give specific names beyond AI chip leader Nvidia.
What is Delta Electronics Thailand?
Delta Electronics Thailand is a subsidiary of Delta Electronics, a Taiwanese electronics manufacturer. A booming EV industry helped drive up revenues, profits, and share prices, which at one point helped make the subsidiary more valuable than its parent company.
Delta Electronics Thailand also spent much of 2024 as Thailand’s most valuable company, with a peak market value of around $64.1 billion last November.
Yet Delta’s share price has been on the slide since then, particularly after the company reported lower-than-expected earnings in mid-February. The company’s shares have lost more than 50% of their value since the November peak. The SET has fallen just over 27% during the same period.
Yugi Takeshima, an equity research analyst at Maybank Securities, warned in a March report that rising costs and the uncertainty over a new global minimum tax on corporate earnings could serve as a headwind to earnings growth.
The global minimum tax is meant to discourage multinational companies from booking excessive profits in low-tax jurisdictions, by ensuring companies pay a minimum level of tax on their income in each jurisdiction that they operate in.
Delta Electronics Thailand was previously subject to a 5.5% tax in 2023. That will rise to 15% starting this year as Thailand imposed a “top-up” tax in January as the country seeks entry into the Organization for Economic Cooperation and Development.
Cheng has previously commented that Delta Electronics Thailand’s share prices may have been overvalued, noting that the price-to-earnings ratio had “gone through the roof.”
He reaffirmed that sentiment in his conversation with Fortune and noted that share prices had gotten “a little bit too speculative.”
Cheng said he was focused on “business fundamentals” amid the tariff situation. Delta Electronics Thailand’s revenue is still at a healthy level, he said, and still growing year on year. Revenue for 2024 reached 164.7 billion baht ($4.9 billion), a 12.5% increase from the year before. The company’s 2023 revenue of 146.4 billion baht ($4.4 billion) was 23.5% higher than 2022 and was driven by its Mobility Group (EV) segment.
But even as EV growth moderates, Cheng remains positive on AI-related infrastructure. At the start of the year, the company projected “double-digit revenue growth” driven by investments.
“AI build-out is a big impetus for revenue support this year, and we also see some positive benefit for profits as well,” he said.
