Thai Tourism Battles Regional Rivals Amid US Tariff Threats

Bangkok's travel industry faces fierce regional competition and looming US import duties as first-half visitor numbers drop, prompting calls for bold government action

 

Thailand's vital tourism sector is grappling with significant challenges as it heads into the second half of 2025, facing intensifying competition from neighbouring countries and the potential impact of new US import tariffs. 

 

A 5% decline in international arrivals during the first six months of the year has raised concerns within the industry.

 

The Thai Retailers Association (TRA) is urging the government to establish new "magnets" such as a "Thailand Shopping Paradise" to attract high-value tourists. 

 

They propose fast-tracking a trial scheme for immediate 7% VAT refunds at participating shops to stimulate spending, with an ambitious target of 7% growth in 2026.

 

According to the latest figures, from 1 January to 13 July 2025, Thailand welcomed 17,754,055 international visitors, a 5.62% decrease compared to the same period last year. 

 

Despite this, the Tourism Authority of Thailand (TAT) maintains its goal of attracting no less than 35.5 million international tourists, matching 2024's figures, with an expected 1.77 trillion Baht in revenue from foreign markets.

 

For domestic tourism, TAT aims for 205 million trips, generating 1.1 trillion Baht. The overall tourism revenue for 2025 is now projected at 2.87 trillion Baht, falling short of the initially set 3 trillion Baht target.

 

The Bank of Thailand (BOT), in its latest economic assessment on 9 July, forecasts an average growth in foreign tourist arrivals to Thailand of 3.5% for 2025-2026. 

 

This is lower than the projected 5% average growth for the global tourism sector during the same period, partly due to heightened regional competition. While the decline in Chinese tourist numbers appears to be stabilising, restoring confidence in safety will require more time.
  

Thienprasit Chaiyapatranun, president of the Thai Hotels Association (THA), highlighted the challenge: achieving zero growth for international tourists in 2025 (to offset the 5% first-half decline) and meeting the BOT's 3.5% average growth forecast for 2025-2026 implies a demanding 7% increase in visitor numbers for 2026.

 


"International tourist arrivals for the first six months are already down by 5%. Therefore, the latter half of the year, especially the peak season in Q4, needs a very strong surge, at least 5% growth, which is no easy feat," Thienprasit explained. "The target of attracting 35.5 million international tourists this year is now very challenging and difficult. However, if the public and private sectors collaborate effectively, we can recover. We hope to see a vibrant high season this year, similar to last year, which could provide momentum for improved numbers in 2026."


 

Before issues regarding safety perception among Chinese tourists emerged in early 2025, Thailand's international tourist recovery rate in 2024 stood at around 70% of pre-COVID-19 levels, compared to a global average of 80-90%. 

 

Despite other countries achieving higher recovery rates, Thailand still welcomed a substantial 35.5 million visitors, having reached a historic peak of nearly 40 million in 2019 before the pandemic.

 

Key pressures on tourism in the second half of the year include fierce competition from Asian neighbours like Japan and Vietnam. Even China is actively attracting tourists with policies such as a 13% VAT refund for foreign visitors to stimulate shopping.


  

The anticipated impact of US import tariffs is expected to become clear in the next 4-6 months.

 

The prevailing economic slowdown due to the cost of living crisis may also deter people from travelling, reducing the number of those willing to spend on holidays.

 

Nonetheless, the industry awaits the outcome of ongoing trade negotiations between "Team Thailand" and the US, particularly concerning blanket import tariffs on goods from 14 countries. 

 

Thailand faces a high 36% tariff rate, commencing 1 August 2025. The results will determine Thailand's competitive position against its neighbours and the broader trade agreements between the US and other nations.

 

Thienprasit further commented that while the BOT indicates Chinese tourist numbers are stabilising, restoring safety confidence will take time. 

 

The association notes that daily Chinese arrivals, now over 10,000, are an improvement from 7,000-8,000, but still far from the past peak of 30,000 per day. While not fully satisfactory, there is potential for a return to previous levels.

 


"I've spoken with Immigration Bureau executives who confirmed that Chinese tourists typically stay in Thailand for only 3-5 days on average. Those staying 7-10 days are usually here for work or business rather than pure tourism, but their spending still benefits the economy," he added.


 

Regarding the list of 93 countries or territories granted visa-exemption (free visa) for temporary stays of up to 60 days for tourism, business, and short-term work (effective 15 July 2024), the association has "repeatedly" proposed to the government a review and reduction of free visa stay durations for certain markets. 

 

They argue that most tourists come from 30-40 countries, and given varying travel behaviours and average stays, a uniform free visa duration for all countries is unnecessary from a security perspective.

 


"We believe it wouldn't be detrimental to reduce free visa stay durations for certain markets, such as China, where it was previously 60 days. It could be cut to 15 days to align with actual tourist behaviour, similar to Japan's 15-day free visa for Thais, not 60 days. We are waiting to see if the government will act on this, as the private sector has frequently made this proposal, especially since the safety image issues emerged in early 2025," Thienprasit urged.


 

Nat Wongpanich, president of the Thai Retailers Association, outlined key strategies to revitalise Thailand's continuously slowing economy and tourism sector. 

 

The association proposes that the government expedite "Thailand Shopping Paradise" to attract quality tourists, suggesting measures like piloting an immediate 7% VAT refund at participating shops for tourists with a minimum purchase of 3,000 baht, starting in key Bangkok shopping districts.

 

They also recommend reducing import duties on fashion, clothing, perfumes, and cosmetics, which currently face high tariffs of 20-30% in Thailand.

 

This would enhance competitiveness with other regional countries, stimulate spending by high-potential tourists, and, crucially, reduce the incentive for purchasing goods from the grey market.

 

Furthermore, the TRA advocates for establishing Duty-Free Zones in tourist provinces like Phuket to incentivise spending and encourage long-term repeat visits. 

 

They also propose organising nationwide discount festivals, similar to Singapore's "Great Singapore Sale," through integrated cooperation among retail stores, restaurants, hotels, and small businesses to create a nationwide shopping atmosphere.



"To stimulate spending and distribute income from quality Russian tourists, who are high-spenders and prefer long stays, we should consider extending their visa validity from 30 days to 45 days after the current scheme ends," Nat suggested.


 

Finally, the association views the government's efforts to tackle "nominee" businesses illegally fronted by foreigners (especially in restaurants, hotels, and supermarkets) and to strictly control "cheap, substandard imported goods" as steps in the right direction, with some positive results already visible. They urge continuous and serious enforcement to ensure fair trade for Thai businesses, particularly SMEs.

(2025/07/18-00:00)