Potential impacts of U.S. trade and tax policy shifts: Accounting considerations for Thai companies

Introduction 

While much of the current discussion centres on trade and operational impacts, the accounting implications are also significant. This technical update outlines the key financial reporting considerations under Thai Financial Reporting Standards (TFRS) that Thai businesses should evaluate in preparation for these potential developments. 

Key accounting considerations  

1. Cost increases and inventory valuation 

Renewed tariffs may result in higher landed costs for goods imported into or exported to the U.S. For Thai businesses reliant on U.S. trade, this could lead to: 

• An increase in cost of goods sold (COGS); 
• A potential write-down of inventory if net realisable value (NRV) falls below cost; and 
• The need to assess impairment of inventory under TAS 2: Inventories, particularly where holding costs exceed expected recoveries.  

Such cost adjustments should be reflected in both measurement and financial disclosures.  

2. Asset impairment and cash flow revisions 

Lower sales volumes or margin pressure arising from trade disruptions may trigger impairment indicators. Under TAS 36: Impairment of Assets, businesses should assess the carrying value of:  

• Production assets allocated to U.S. operations or customers; and 
• Other non-current assets where recoverable amounts may be reduced. 

Cash flow scenario analyses are recommended, particularly when value in use is being reassessed.  

3. Trade receivables and credit risk 

Customers affected by tariffs may reduce order volumes or delay payments. Under TFRS 9: Financial Instruments, expected credit loss (ECL) models may need to be updated to reflect: 

• Re-evaluation of customer credit profiles, particularly in sensitive sectors; 
• Adjusted macroeconomic assumptions; and 
• Overlay adjustments to capture tariff-related risks.  

4. Foreign exchange volatility 

Changes in U.S. trade and monetary policy may increase foreign exchange volatility. For companies with significant USD exposure, it is important to ensure: 

• Accurate remeasurement of foreign currency balances under TAS 21: The Effects of Changes in Foreign Exchange Rates; and 
• Expanded disclosures relating to FX risk and hedging strategies in accordance with TFRS 7: Financial Instruments – Disclosures.  

This is especially relevant where contracts are denominated in foreign currency or where natural hedging arrangements have been impacted.  

5. Uncertain tax positions and deferred tax accounting  

Proposed changes to U.S. corporate tax policy and the global minimum tax regime could have implications for Thai businesses with U.S. operations or income streams. These may include: 

• Reassessment of deferred tax assets and liabilities in accordance with TAS 12: Income Taxes; 
• Consideration of recoverability of tax losses and temporary differences; and 
• Disclosure of uncertain tax positions, particularly where legislation remains unclear 

Ongoing monitoring of U.S. legislative developments is important to support accurate modelling of potential tax exposure.  

6. Business restructuring and asset classification  

In response to increased trade costs or supply chain disruption, businesses may consider relocating operations or exiting certain markets. Under TFRS 5: Non-current Assets Held for Sale and Discontinued Operations, this may result in: 

• Reclassification of assets held for sale; 
• Additional disclosures relating to discontinued operations; and 
• Fair value remeasurement and impairment testing prior to disposal.  

Financial reporting teams should collaborate closely with operational and tax functions to assess the accounting implications of any restructuring decisions.  

Recommended actions  

In anticipation of ongoing trade and tax developments, Thai companies should consider the following actions:  

• Reassess contracts, supply chain exposure, and customer dependencies linked to U.S. trade; 
• Perform stress testing on asset values and working capital assumptions; 
• Review the appropriateness of ECL, FX, and deferred tax assumptions; 
• Evaluate the accounting and disclosure consequences of any restructuring or market exit; and 
• Closely monitor developments in both Thai and international regulatory environments.  

Conclusion  

Current uncertainty in global trade and tax policy— particularly relating to the U.S.—may present new accounting and financial reporting challenges for Thai businesses. Timely analysis, robust scenario planning, and accurate reporting under TFRS will be essential in responding to these changes. Ongoing international developments should also be monitored to support effective risk assessment and ensure that financial reporting remains aligned with evolving economic and regulatory conditions.  

References:  

• Tariffs on Imports and Global Trade. 
  Retrieved from Forvis Mazars. 
• Tariff Implications for the Manufacturing Sector.  
  Retrieved from Forvis Mazars.