- 24
- July
"US Section 122 Tariff Expires 24 July 2026: What Cost Data Thai Exporters Must Prepare" — the short answer is that exporters need standard cost per SKU together with matching BOM, landed cost, FOB price and HS code so they can calculate how a rate that may move from 10% to 12.5% erodes the margin of each product model — and respond to customers about price adjustments in time. This article explains how to translate the tariff gap into a cost per unit, what cost data to prepare before quoting, and how it ties back to building standard costing and cost allocation that is ready for the situation.
In one line: As Section 122 (10%) expires today and the proposed Section 301 (12.5%) moves in to replace it, factories without standard cost per model cannot calculate the margin lost per SKU — and cannot answer customers about price changes in time.
What happens today, 24 July 2026
Today is the real deadline. The tariff measure under Section 122 that charges imports from Thailand at 10% is scheduled to expire on 24 July 2026, with the statute allowing this rate to lapse. At the same time there is a new Section 301 proposal set to replace it, covering 46 countries including Thailand, at 12.5%.
The key difference: Section 122 has a statutory rate ceiling and a fixed expiry, but Section 301 has no statutory rate ceiling and no fixed expiration date. In other words, if the transition happens, Thai exporters would face a tariff cost that is both higher and more "durable" than before. Cost planning is therefore no longer a temporary exercise.
Timeline to watch: Section 122 at 10% is set to expire 24 July 2026 → the Section 301 proposal at 12.5% waits to take over · Thailand has not yet reached a full trade agreement with the US, while Malaysia, Indonesia and Cambodia already have · As of publication (24 July 2026) the status is still in transition — follow official announcements closely.
Thai product groups at highest risk
Not every product is affected equally. Groups that rely heavily on the US market and compete mainly on price will feel the 2.5 percentage-point gap most sharply, because their margins are already thin.
| Product group | Nature of the risk | Cost data that must be accurate |
|---|---|---|
| Rice | Commodity, competes on price, thin margin | Cost per sack/ton + freight to port (FOB) |
| Textiles | Many SKUs and models, volatile material cost | Standard cost per model + per-item BOM |
| Yarn | Raw material dominates the cost structure | Material cost per unit + yield loss |
| Personal protective equipment (PPE) | High volume, low margin per piece | Cost per piece + correct HS code |
| Solar cells | High value per unit, sensitive to tariffs | Landed cost + standard cost per panel |
How 10% to 12.5% translates into cost per SKU
A 2.5 percentage-point gap sounds small, but it has to be calculated on each model's "FOB price," and when compared against an already-thin gross margin the profit impact is larger than it looks. The principle: import tariffs are levied on the value of goods at the port of entry, so every added percentage point is "a cost someone has to absorb" — either the US buyer or the Thai exporter.
The trap to avoid: Many factories know only the "total factory cost" or the "average cost per order," but have no standard cost per model. When a customer asks "for this model, how many percent do we need to raise the price if the tariff goes up?", they cannot answer within a day — and lose the chance to negotiate sharing the tariff burden with the buyer.
The table below shows the method for the tariff gap per unit, using figures purely as an "illustrative example to explain the method" — not real numbers for any company. Substitute your own product's real FOB price and margin.
| Item (method) | Old rate 10% | New rate 12.5% |
|---|---|---|
| FOB price per unit (tariff base) | FOB | FOB |
| Import tariff per unit | FOB × 10% | FOB × 12.5% |
| Tariff gap per unit | FOB × 2.5% (2.5 percentage points) | |
| If the exporter absorbs it, profit per unit falls by | = tariff gap ÷ original profit per unit | |
Illustrative example to explain the method: suppose a model has a gross margin of 15% of the selling price and FOB ≈ selling price. When the tariff rises 2.5 percentage points, if the exporter absorbs it fully, the profit lost = 2.5% ÷ 15% ≈ about one-sixth of the gross profit per unit. The thinner the margin (say 8-10%), the higher the share of profit lost. This is exactly why it must be calculated "per model," not as a factory-wide average, since each SKU has a different margin. Read more on choosing between Periodic vs Perpetual costing to get costs timely enough to respond to a situation like this.
Cost data to prepare before answering customers on price
When the tariff shifts, US customers immediately ask back "who absorbs this gap?" The negotiation is instantly weaker if you do not know the true cost of each model. The checklist below is the minimum data you must have.
| Data you must have | What it is for | If you lack it |
|---|---|---|
| Standard cost per model | Know the profit per unit of each SKU | Cannot say which model is hit hardest |
| Per-item BOM | Split material/labour/overhead cost | Cannot adjust cost as materials move |
| Landed cost | Include freight, insurance, duty to destination | Misjudge the real delivered price |
| FOB price per model | Serves as the import tariff base | Cannot compute the tariff gap per unit |
| HS code matching the product | Identify the tariff line and rate actually applied | May pay the wrong line / lose time |
Do this today: before the day ends, pull the full list of SKUs you export to the US and check whether each model has all five items in the table. The models with incomplete data are exactly the ones you will "fail to answer in time" when the tariff changes.
Thailand vs ASEAN neighbours — how negotiation status differs
Another factor exporters must grasp in business terms: price competitiveness does not depend on internal cost alone, but also on whether regional rivals have negotiated a better rate.
| Country | Trade-agreement status with the US | Business implication |
|---|---|---|
| Thailand | No full agreement yet | Faces uncertainty; must be armed with cost data |
| Malaysia | Agreed | Has clarity for pricing plans |
| Indonesia | Agreed | Has clarity for pricing plans |
| Cambodia | Agreed | Has clarity for pricing plans |
In business terms, uncertainty is a manageable risk. Thai exporters with accurate cost data can negotiate with buyers on rational grounds — for example proposing to share the tariff burden proportionally, or shifting the product mix toward higher-margin models. This kind of readiness aligns with enterprise risk management, which treats external volatility as something to plan for in advance. If your team is still building the fundamentals, our guide to what an ERP system is is a useful starting point.
How Saeree ERP helps prepare cost data
The production costing module in Saeree ERP stores standard cost per model and per-item BOM, so you can pull the profit per unit of each SKU instantly. The multi-currency selling price module supports setting an FOB price per model, letting the sales team run what-if analysis of cost per FOB per HS code — for example, "if the tariff is 12.5%, what profit is left for models A/B/C?" — so they can answer customers and negotiate price adjustments quickly.
To be straightforward: an ERP does not cut tariffs or negotiate for you, but it puts "decision-ready data" in your hands within minutes rather than across a day. Factories still doing costing across multiple Excel files often hit mismatched data when they need to respond fast. Having a central system that links BOM, cost and selling price together is therefore a crucial foundation. See the overview on our solutions page, or talk to our team to assess how ready your organisation's cost data is.
Conclusion
24 July 2026 is a turning point where Thai exporters cannot control the international trade outcome, but can fully control the "readiness of their cost data." The 10% to 12.5% tariff gap becomes a tangible number only when you have complete standard cost per model, BOM, landed cost, FOB and HS code. Factories that prepare the data ahead of time are the ones that answer customers on time and protect their margins best.
"On the day tariffs change, the exporter who answers customers fastest is not the best negotiator — it is the one who knows their own cost per model most precisely."
- The Saeree ERP team's perspective on preparing cost data to withstand trade volatility
References
- Bangkok Post — New US tariff could threaten Thai exports (July 2026)
- Tariffs Tool — Section 301 Replacing Section 122: 12.5% on 46 Countries
Get standard cost per model ready before tariffs change
Saeree ERP helps exporters build standard cost per model, per-item BOM and multi-currency selling prices, so you can calculate the margin impact per SKU quickly. Talk to our team to assess how ready your organisation's cost data is.
Consult us on costing systemsTel 02-347-7730 | sale@grandlinux.com
