The Philippines will remain a secondary choice for manufacturers planning to move their operations out of China as a result of shifts in the tariff environment, a study by the De La Salle University’s Angelo King Institute (DLSU-AKI) said.
The Philippine Economy Monthly Report released during the Holy Week by DLSU-AKI was authored by Jesus Felipe, Mariel Monica Sauler, and Eva Marie Aragones.
As of 2024, Philippine exports to the US represented about 17 percent of the country’s total exports, but only six of the more than 1,000 products exported by the country to the US represented more than 50 percent of the country’s total exports to the US.
These were classified as HS 8542 for electronic integrated circuits and related parts; HS 8544 for insulated wire, cable and other insulated electrical conductors; HS 8504 for electrical transformers, static converters or inductors; HS 8471 for automatic data processing machine and related units, HS 8517 for telephone sets, including smartphones; and HS 1513 for coconut “copra,” palm kernel or babassu oil and related fractions).
“Most of these products are intermediate goods or parts for electronics and machinery. Only HS 1513 (coconut ‘copra,’ palm kernel or babassu oil and fractions thereof) is an agricultural export,” the institute said.
The institute said the Philippines’ top six exports to the US account for less than 10 percent of America’s total imports as of 2024, adding that only HS 8471 and HS 8517 are among the top products imported by the US.
“Moreover, for most of these products, the Philippines is not among the US’ major suppliers. That is, aside from HS 1513 (coconut “copra,” palm kernel or babassu oil and fractions thereof) and perhaps HS 8544 (insulated wire, cable, and other insulated conductors), the Philippines exports less to the US than Canada, Mexico, China, and most of the Asean,” it said.
The US imports HS 8542 substantially from Malaysia.
Thailand and Vietnam also supply more of this product classification to the US than the Philippines.
“This situation holds for most of the other products in the Philippines’ key export portfolio,” the institute said.
“A notable exception would be HS 1513 (coconut “copra,” palm kernel or babassu oil and fractions thereof), where the Philippines supplied nearly half of the US’ imports of HS 1513 with Indonesia as the only other notable competitor,” it said.
When specific products are considered, the Philippines does not compete with other Asean countries for the US market, except perhaps in HS 8471 or automatic data processing machine and related parts, and HS 8517 or telephone sets including smartphones.
Compared with its Asean peers, the Philippines has found a productive niche in HS 8544, HS 8504, and especially HS 1513.
HS 8517 or telephone sets, including smartphones, appear as a key export to the US for most Asean countries, especially Vietnam and Thailand — two of the US’ top import sources, DLSU-AKI said.
Under the current regime of a 10 percent tariff on all countries and the 125 percent tariff imports on China — now increased to 145 percent —, it is unlikely that the Philippines will experience more than a small increase in exports, even before considering the capacity of Philippine-based manufacturers.
For products like HS 8517 (telephone sets, including smartphones), of which China supplies about half of US imports, it is more likely that countries like Vietnam and Thailand be chosen, especially in the absence of any differentials in the tariffs imposed,” it added.
On April 5, the US imposed a unilateral 10 percent baseline tariff on its trading partners worldwide as part of President Donald Trump’s tariffs regime.
“The initial 10 percent ‘baseline’ tariff paid by US importers took effect at US seaports, airports and customs warehouses at 12:01 am ET (0401 GMT), ushering in Trump’s full rejection of the post-World War Two system of mutually agreed tariff rates,” Reuters said in a report on April 5.
However, Trump said on April 9, he authorized a 90-day pause as part of his tariff plan but was also raising the tariff rate for China to 125 percent, effective immediately, Reuters said in a separate report.
China raised its levies on imports of US goods to 125 percent on April 11, hitting back at Donald Trump’s decision to single out the world’s No.2 economy for higher duties, while dismissing the US president’s tariff strategy as “a joke.”
Investors had been waiting to see how Beijing would respond to Trump’s move on to effectively raise tariffs on Chinese goods to 145 percent while announcing a 90-day pause on duties on dozens of other countries’ goods.
