By Aubrey Rose A. Inosante and Justine Irish D. Tabile, Reporters
US PRESIDENT Donald J. Trump is enforcing a larger-than-anticipated duty on Philippine exports to the United States, as part of an extensive reciprocal tariff strategy that will affect all of its trade associates.
Nevertheless, Philippine government representatives minimized its effects, asserting that this remains lower than the duties imposed on the other Southeast Asian nations.
Finance Secretary Ralph G. Recto stated on Thursday that the Philippine economy, primarily fueled by domestic consumption, is “comparatively robust” against trade disputes.
“Nonetheless, akin to all nations, we are not immune to the repercussions of the anticipated drop in global trade and potential deceleration in worldwide growth caused by supply-chain disturbances, elevated interest rates, and increased inflation,” Mr. Recto expressed in a declaration.
Trade Secretary Cristina A. Roque indicated that the reciprocal duties may yield prospects for the Philippines as regional rivals will face augmented tariffs.
“We approach this situation with cautious optimism, believing that the latest US implementation of reciprocity tariffs will create strategic chances for the Philippines to enhance its economic ties with the US,” she remarked in a statement.
Ms. Roque noted that she intends to arrange a meeting with her US counterpart to discuss “fortifying” trade relationships between the two nations.
On Wednesday, Mr. Trump declared a 10% tariff on all its trading associates, anticipated to commence on April 5. (See related story “Trump’s tariffs ignite global trade conflict as China, EU retaliate”).
The US will additionally impose distinct enhanced reciprocal tariffs on significant trading allies including the European Union, China, Japan, South Korea, and the Philippines, starting April 9.
“Foreign nations will ultimately be required to compensate for the privilege of entry to our market — the largest market globally,” Mr. Trump commented.
As per an infographic shared by the White House on X, the Philippines will incur a 17% “discounted reciprocal tariff” since the Philippines levies a 34% tariff on imports from the US.
However, an annex document pertaining to the executive order on reciprocal tariffs indicated that the adjusted reciprocal tariff for the Philippines stands at 18%.
It was not immediately understood why there was a contradiction in the tariff figures between the infographic released on X and the annex document on The White House site.
Nevertheless, Philippine representatives referred to the 17% tariff rate in their press comments.
Among Southeast Asian countries, Cambodia bears the heaviest tariff at 49%, followed by Laos (48%), Vietnam (46%), Myanmar (45%), Thailand (37%), Indonesia (32%), Malaysia (24%) and Brunei (24%). Singapore will incur a baseline tariff of 10%.
“The imposition of the 17% tariff, which ranks as the second lowest, is not overly adverse in our view. We still perceive it as somewhat advantageous,” Presidential Communications Office Undersecretary Clarissa A. Castro remarked at a Palace briefing in a blend of English and Filipino.
Agriculture Secretary Francisco P. Tiu Laurel, Jr. expressed that the Philippines could capitalize on the relatively lower tariff rate compared to its neighbors to “promote increased sales of our products to the US.”
“The fresh tariffs also place the Philippines in a more favorable position, particularly for certain export commodities like coconuts. With lower tariffs than Thailand, Philippine coconut exports can be more competitive,” Ms. Roque stated.
Ms. Roque mentioned that there are Philippine products that will be exempt from reciprocal tariffs, such as copper ores and concentrates and integrated circuits.
According to a White House fact sheet, the reciprocal tariffs will not extend to specific goods including semiconductors, copper, pharmaceuticals, gold, and “certain minerals that are lacking in the US.”
However, agriculture-based products, especially food exports, are not excluded from reciprocal tariffs.
“The recent actions by the US have rendered US imports more expensive, enabling their local manufacturers to compete. Equally significant for the US is enhancing its access to rapidly expanding economies like the Philippines,” Ms. Roque mentioned.
“In this context, the Philippines aspires to actively communicate with the US to promote improved market access for its crucial export interests, including automobiles, dairy products, frozen meats, and soybeans, within the framework of a bilateral free trade agreement.”
Special Assistant to the President for Investment and Economic Affairs Frederick D. Go remarked that some investors might consider relocating and establishing manufacturing facilities in the Philippines, given the comparatively lower tariffs on Philippine exports to the US.
Trade Undersecretary Allan B. Gepty emphasized the importance of nurturing “positive relations” with the US. “It would be beneficial to explore how we can capture opportunities from the potential trade diversion and recalibration of some investments in the region,” he expressed.
‘GAME CHANGER’
Fitch Ratings Head of US Economic Research Olu Sonola asserted that Mr. Trump’s bold tariffs represent a “game changer, not solely for the US economy but for the global economy.”
“Numerous countries are likely to find themselves in a recession. If this tariff rate persists for an extended duration, you can disregard most forecasts,” Mr. Sonola remarked.
Elevated tariffs might also escalate prices and diminish demand for goods produced in the Philippines in the US.
“The US constitutes the largest export market for the Philippines, thus, this will inevitably hinder Philippine growth,” former commissioner of the Philippines Tariff Commission George N. Manzano noted in a Viber message.
In 2024, the US was the leading destination for Philippine exports, accounting for 17% of the overall.
“US importers will add all these additional tariffs to the selling price in the US,” President of the Foreign Buyers Association of the Philippines Robert M. Young informed BusinessWorld.
“Consequently, the Philippines will encounter challenges in securing export orders due to reduced or no demand,” he added.
When asked if the Philippines could gain from the higher tariffs enforced on other nations, Mr. Young noted that the Philippines has elevated costs.
“To start with, the
The Philippines was offering goods at a higher cost than Vietnam, India, and Cambodia. “This implies that goods from the Philippines will be the last to be chosen from the shelves,” he remarked. “Moreover, Vietnam responded promptly by cutting their tariff on American goods arriving in Vietnam.”
In 2024, the Philippines shipped $12.14 billion worth of products to the US. Of this amount, 53% or $6.43 billion consisted of electronic items.
“Electronics and semiconductors, which make up the majority of Philippine exports to the US, will face vulnerabilities. Clothing, footwear, and textile items, which are dependent on favorable trade agreements, may also encounter competitiveness challenges,” stated John Paolo R. Rivera, Senior Research Fellow at the Philippine Institute for Development Studies.
“Exports in agriculture, including coconut oil, canned fruits, and seafood, might experience a drop in demand due to price sensitivity in the American market,” mentioned Mr. Rivera.
Mr. Rivera observed that the immediate effect on the Philippine gross domestic product (GDP) may not be “dramatically severe.”
“A prolonged tariff conflict could hinder investment confidence and export expansion. If companies transfer increased costs to consumers, inflation could rise,” he remarked.
The Development Budget Coordination Committee aims for a GDP growth of 6-8% this year. It also forecasts growth rates of 6% and 5% for exports and imports, respectively.
In a report, ANZ Research suggested that the reciprocal tariffs might have a “less significant impact” on the Philippines, alongside Indonesia and India, due to their reduced dependence on exports.
“Our assessment indicates that these tariffs are not definitive and could be negotiated down, based on the level of decrease in the bilateral trade surplus with the US,” stated ANZ.
Statistics from the Office of the US Trade Representative revealed that bilateral trade between the Philippines and the US achieved $23.5 billion in 2024, comprising $9.3 billion in US exports and $14.2 billion in imports.
The US goods trade deficit with the Philippines stood at $4.9 billion in 2024, reflecting a 21.8% increase from the previous year.
To alleviate the adverse impacts of the tariffs, Mr. Young advised that “a collaborative effort from the Philippine government and private sector is necessary to explore alternative export markets.”
Bianca Pearl R. Sykimte, Director of the Department of Trade and Industry-Export Marketing Bureau, indicated that the department is already investigating new export markets in regions like the Middle East and Africa.
Ma. Teresita Jocson-Agoncillo, Executive Director of the Confederation of Wearables Exporters of the Philippines, mentioned that the reciprocal tariffs will be additional to the most favored nation (MFN) apparel rates.
“It would be prudent for us to await the US to issue the guidelines. It appears that the reciprocal tariff will be MFN rates plus 17%,” she conveyed in a Viber message. “There remains an edge, as the Philippines currently has the lowest (tariff) compared to ASEAN (Association of Southeast Asian Nations) counterparts, but it is important to note that ultimately it could still affect global sourcing and supply chain dynamics.”
