Over nearly 60 years and two generations, Chatchai Lertviwatkul’s family business in Thailand was transformed from a manufacturer of leather gloves to a producer of pet food and treats, with a third of its products shipped to the United States from a modest factory on the outskirts of Bangkok.
So when Mr. Lertviwatkul learned in April that President Trump wanted to impose a 36 percent tariff on goods from Thailand, he was stunned. What would that mean for his company, S.I.P. Siam Inter Pacific, and the country’s pet food export industry?
After a decade of rapid growth, Thailand is now the biggest overseas supplier of pet food to the United States, accounting for more than one-third of all imported cat and dog food.
As Thailand and dozens of other countries near the end of a 90-day rollback of punishing tariffs to negotiate a permanent deal, Mr. Lertviwatkul, 52, said the shock had worn off, but the future of the company’s American business remained unclear.
“We need to see how the Thai government will negotiate,” he said, speaking above the hum of a factory churning out lickable cat treats for a Canadian customer and mint-flavored dog snacks in the shape of a toothbrush. “We need to wait and see,” he added. “There’s nothing much we can do.”
Mr. Trump’s tariffs are causing upheaval in supply chains and global trade. Businesses in Southeast Asia are scrambling because of the fluctuations in tariffs with the United States and America’s messy trade war with China. With so much volatility in trade policies, some companies are looking to shift their focus away from the United States.
If the deadline on July 9 comes and goes with no deal and Thailand’s tariffs return to the 36 percent rate announced on what Mr. Trump called “Liberation Day,” Mr. Lertviwatkul, who produces food and treats that American brands sell, said he would temporarily halt supplying U.S. customers.
“We need to pause shipping to the U.S. unless something changes,” he said. “Our customers can’t increase the prices that much at retail.”
Before the announcement, Mr. Lertviwatkul expected a tariff of around 10 percent to 15 percent, never double or triple that. The three-month pause has given his company time to talk to customers and cut costs.
But, he said, even a 10 percent “base-line” tariff that Mr. Trump has left in place has proved challenging to weather. Any significantly higher rate would force Mr. Lertviwatkul to shift the company’s focus to customers in Asia.
Thai officials have said they are confident they could strike a deal with the Trump administration to lower the duty to a more manageable figure.
Anusorn Tamajai, dean of the economics department at the University of the Thai Chamber of Commerce and a candidate for Thailand’s next central bank governor, said political turmoil in the country’s government might delay negotiations with the White House.
Mr. Tamajai said he expected Thai policymakers to pledge to increase imports of American agricultural products from Republican-led states in the Midwest as a gesture of good will to Mr. Trump. Thailand, for example, could lower or eliminate its current 73 percent tariff on corn maize imported from the United States, he said, a move that could help the pet food industry lower costs for materials.
Pet food is one of Thailand’s most significant and fastest-growing export industries. The annual value of its pet food exports has nearly doubled in the past five years, to $2.5 billion, according to the Kasikorn Research Center in Bangkok. It has piggybacked on the country’s robust seafood and food processing industry, using fish and meat byproducts for wet food and treats for pets.
The pet food industry started to grow rapidly during the first Trump administration, when many companies wanted to diversify operations away from China. When spending on pets spiked during the pandemic, companies added manufacturing capacity in Thailand to meet the surge in demand.
Purina, the pet food subsidiary of Nestlé, invested $150 million on a new factory making cat food in eastern Thailand three years ago. Mars Petcare, the company behind pet food brands like IAMS and Pedigree, expanded one of its Thai manufacturing facilities in 2021.
Zuru, a conglomerate in Hong Kong that makes a range of consumer goods including toys and beauty products, started building a pet food production site in Thailand’s eastern seaboard late last year. The plant, about the size of four football fields, is Zuru’s first pet food factory. The company plans to consolidate all of its manufacturing, including the products it outsources to other firms, in the country. Production is scheduled to start early next year.
Previously, it had worked with pet food manufacturers in China, the United States and Europe. Thailand was the best option, however, for centralizing its pet food business, the company said, because of the wide availability of raw materials and talent. Many large pet food brands have established research and development hubs in Thailand.
Zuru makes its toys in China, but Thailand was the better option for pet food — regardless of tariffs — because of the country’s supply chain.
“Thailand was really the only serious consideration,” said Alistair King, co-founder of Zuru’s pet care business.
Mr. King, 26, said Zuru was weighing where to set up its factory before President Trump was elected, and committed to Thailand shortly after he won. At the time, the tariff for imported pet food from Thailand was zero, compared with 25 percent for goods from China. While it remains to be seen whether the White House will lower the tariff for Thailand, the expectation is that the rate will be lower than the levy on Chinese goods.
It also does not make economic sense to try to manufacture wet pet food in the United States because Mr. Trump put tariffs on aluminum, which inflates the cost of making cans.
“The more relevant thing, I think, for Thailand is how it is relative to other countries on the tariffs,” Mr. King said.
Tanut Totup, chief executive of Bluefalo Petcare, said his company had benefited from the trade war between the United States and China. Prices for soybeans and wheat from the United States are down 30 percent to 40 percent from a year ago, he said, because Chinese customers have stopped buying when Beijing imposed retaliatory tariffs on American goods.
Mr. Totup, 54, started his company 14 years ago after spending the early part of his career helping companies build pet food factories in Thailand. His business in central Thailand has grown rapidly. He opened a second factory for dry food two years ago and is planning to break ground on a third manufacturing site to expand his export business.
Even though Bluefalo does not have a sales or marketing team, the company works with more than 20 overseas customers, making food and treats for export. He said his customers came to him, eager to find a Thai partner.
Bluefalo had considered exporting to the United States, but Mr. Totup said he accelerated those plans after Mr. Trump imposed the tariffs, which he figured would give the Southeast Asian country a leg up on Chinese competitors.
“The thing is that we couldn’t compete with China, but now we can,” he said. “As long as Thailand’s tariff is lower than China’s, we’re OK.”
Phuriphat Dejsuphong contributed reporting.
Daisuke Wakabayashi is an Asia business correspondent for The Times based in Seoul, covering economic, corporate and geopolitical stories from the region.
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