A Hong Kong garments company, a major supplier to the United States, plans to expand operations in the Philippines, Trade Secretary Cristina Roque said.
In an interview during the Holy Week, Roque said the company was encouraged by the 17-percent reciprocal tariff imposed on Philippine exports to the US.
She will meet with executives of the company by the end of the month but she declined to identify them and the company.
Industry and other government sources, when sought for comment on Sunday, April 20, could not confirm those plans.
But Robert Young, president of the Foreign Buyers Association of the Philippines, said other variables would offset the lower tariff on the unit cost of the item.
Young said these other variables would include the high cost of power, labor and logistics as well as the level of efficiency and productivity of locally produced garments.
He added the expense of raw materials importation would add up to the cost too.
The implementation of the reciprocal tariffs has been suspended for 90 days, during which a 10-percent baseline tariff is in effect.
Young believed the lower tariffs on Philippine exports compared to those slapped on competitor countries would not automatically mean a shift in sourcing.
“We must remember the Philippines is 7th or 8th in export sales of apparel to the US at approximately only $1 billion. Buyers prefer present contacts and will be the priority before jumping to a new guy due to the ease of doing business and comfort level,” he added.
“I’m going to meet with a garment manufacturer in Hong Kong soon … before the end of the month. Because they’re already thinking of strengthening and adding more production in the Philippines because of the 17 percent (US tariff). They’re thinking that it will stay at 17 percent,” Roque said.
“But it’s hard to say. It’s hard for us to speculate. But now we’re already talking. The people are already talking to us. They really want to explore. They’re planning to grow it already here in the Philippines,” she added.
Philippine apparel and clothing accessories exports fell 6.1 percent to $662.59 million in 2024 from $705.63 million a year earlier, data from the Philippine Statistics Authority (PSA) show.
Exports of travel goods and handbags, declined 3.5 percent to $546.42 million from $566.5 million in the same comparable period.
There are no statistics on US purchases from the Philippines but a September 2024 report of the United States International Trade Commission (USITC) showed the US is the largest single-country apparel importer in the world. The USITC is an independent, nonpartisan federal agency,
US imports of apparel amounted to $79.3 billion in 2023, mostly from Asia.
The report said Bangladesh, Cambodia, India, Indonesia, and Pakistan were among the top 10 US suppliers that same year.
Based on an April 2 announcement of the White House, the reciprocal tariffs on these countries are much higher than those to be imposed on the Philippines: 34 percent for Bangladesh; 49 percent for Cambodia; 26 percent for India; 32 percent for Indonesia; and 29 percent for Pakistan.
