The Philippine government is open to slashing import tariffs on United States-made vehicles if a free trade agreement (FTA) between the two countries is established, Finance Secretary Ralph Recto said.
In a Viber message on Tuesday, Recto said an FTA is always a possibility, stressing there have been discussions on this matter with US officials in the past.
“We will consider lowering tariffs on US cars if we have a free trade agreement with the US,” Recto said.
“We know that (US) President (Donald) Trump wants to protect the US auto industry and is interested in exporting US manufactured vehicles,” he added.
The Philippines imposes a 30 percent most favored nation (MFN) tariff rate on passenger cars imported from the US.
“There’s always a possibility (for a Philippines-US FTA) considering that we are an ally and both countries can expand our economic cooperation,” Recto said.
“For (the) Philippines’ side, we may want (to) lower tariffs of our exports to the US and be part of (the) US supply chain, if ever,” Recto added. That is, if the FTA pushes through, he said.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, cited data from the Philippine Statistics Authority which showed that for the first half of 2024, imports from the US to the Philippines under the general transport equipment category had a value of $190 million.
“An FTA would help address potential reciprocal tariffs. However, this could be challenging amid Trump’s protectionist stance which might be likened to reversing some of the free trade agreements through threats of higher US import tariffs and reciprocal tariffs,” Ricafort said.
Any FTA would reduce the cost of importing US products such as vehicles, but the amount may not be that much and could only be on high-end US vehicles since US automakers already produce in ASEAN/Asia at a much lower cost than those in the US, Ricafor said.
US vehicle brands being imported into the Philippines include Ford, GM, and Tesla, among others.
Ricafort said there are FTAs with Japan, South Korea, China, ASEAN, and India for other vehicle brands in the region, covering both US and Asian brands that have production facilities in other Asian countries, given the regionalized production and marketing chains.
Rommel Gutierrez, president of the Chamber of Automotive Manufacturers of the Philippines, confirmed in a text message that the Philippines does not import many cars directly from the US, and that some car companies already import vehicles from within the region.
Meanwhile, EJ Francisco, director for Communications of Ford Philippines, said in a text message that some of the company’s vehicle models such as Explorer, Mustang, and Bronco, are imported from the US.
