The Philippines may be “moderately exposed” to the risk of higher US tariff starting August 1, but even that could erode the country’s export competitiveness, especially as regional rivals negotiate for exemptions or preferential terms, analysts said.
John Paolo Rivera, research fellow at the Philippine Institute of Development Studies, said the revised US tariff — set higher at 20 percent from 17 percent — would pressure pricing and margins for the country’s goods exports.
“Compared with other Asean countries, the Philippines remains moderately exposed,” Rivera stated in a text message on Thursday.
“Vietnam, Thailand, and Malaysia face steeper duties, and our 20 percent rate is relatively lighter. But tariff risks still undermine our export competitiveness, particularly as these same markets negotiate exemptions or favorable terms,” he added.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said in a separate message on Thursday that it remains to be seen whether US President Donald Trump would compromise and settle for lower negotiated tariffs in the course of trade talks.
Ricafort noted that Trump has shown a pattern in recent months of initially threatening higher tariffs—such as with China—as a negotiating tactic, but eventually settling for more moderate rates.
Move fast
Rivera emphasized that if exporters act swiftly, “we could position the Philippines to attract hand-off orders from countries facing higher tariffs—but only with quick adaptation and supportive policy.”
That opportunity, he added, should be paired with stronger non-price factors such as better logistics, higher product quality, and improved service.
“The 20-percent US tariff on Philippine exports raises the stakes in trade relations. It replaces the previous 17-percent reciprocal rate and signals US resolve to counter trade imbalances,” Rivera said.
Biggest hit
Ricafort echoed Rivera’s sentiment, stating that Philippine exporters would bear the brunt of the impact, as the US is the country’s largest export market, accounting for 17 percent of total sales.
He warned that the tariff could dampen export performance, which may indirectly slow down the overall economy.
However, Ricafort also said the tariff’s drag on GDP would likely be limited, noting that the Philippine economy is less reliant on exports for growth.
“Philippine exports are not as large compared to other ASEAN and Asian countries,” he added, suggesting the adverse effects may be more manageable.
