STATE policymakers, economists, and trade experts are still scrambling the numbers and running pros and cons models as to the immediate and long-term impact of the 17% tariff slapped by the United States on Philippine goods.
Government mouthpieces are meanwhile spinning the 17% tariff as a “gift” from the US as the Philippines is the only Asian country that got the lowest tariff — except for Singapore — which got slapped with the baseline 10%.
Post-April 9, 2025, all the goods that we now sell or export to mighty America will now cost 17% more, which will impact Philippine-based companies whose bulk of business depends on US orders.
This will inevitably result in slower demand for “expensive” Philippine exports to the US and, therefore, could further derail the country’s development, which is already groaning under the weight of a P16.3-trillion debt.
Our economic managers may already kiss goodbye their gross domestic product (GDP) target of 6% to 8% this year. Already, some quarters are predicting a below 6% GDP growth this year despite being an election year.
The prospect of foreign companies in high-tariff countries relocating their operations in the Philippines will likely face stiff competition from Singapore, which is emerging as the more attractive investment destination in Asia with its 10% tariff. Singapore, unlike the Philippines, boasts of modern infrastructures in communications, transportation, and logistics that investors are looking for.
‘Once these countries start feeling the brunt of the new US tariff regime, a dramatic drop in OFW remittances could be expected.’
After we have found our bearings, our economic leaders should sit down and negotiate with the US for a paring down of the 17% tariff to 10%.
Vietnam, which was slapped with a high tariff of 46%, has communicated to the Trump administration its openness to a zero tariff in exchange for reciprocity.
Outside Asia, Argentina appears to have secured a bilateral zero tariff deal with the US to dodge the 10% tariff.
We are not sure if the same zero tariff is a sound counter strategy for us considering that the US is our major trading partner with total bilateral receipts reaching $36.1 billion in 2022.
Currently, our export menu to the US consists of semiconductor devices and computer peripherals, automobile parts, electric machinery, textiles and garments, wheat and animal feeds, coconut oil, and information technology/business process outsourcing services.
Key US exports to the Philippines are agriculture goods, machinery, cereals, raw and semi-processed materials for the manufacture of semiconductors, electronics, and transport equipment.
In 2022, our exports to the US amounted to $23.3 billion which is almost half of what America traded to us worth $12.8 billion. Philippine exports to the US further contracted to $14.2 billion in 2024 while US goods shipped to the country also dropped to $9.3 billion.
In simple math, a zero tariff between the two countries would be disadvantageous in the short-term since we are still selling more than what the US is buying from us?
Analysts are likewise flagging this early the potential adverse effect of America’s high tariffs in countries where we have large OFW presence.
The Philippine Statistics Authority placed the total OFW population scattered around the world at 2.16 million in 2023, with cash remittances totaling P239 billion.
Asia, including the Middle East, remains our biggest employer of OFWs followed by South America, Europe, Australia and Africa.
Once these countries start feeling the brunt of the new US tariff regime, a dramatic drop in OFW remittances could be expected.
The catchphrase “every time the US sneezes, the world catches a cold” is again boldly at play on the world’s stage. In just one stroke, Trump has redefined America’s global trade policy in its favor, even upending the US-Philippine trade relations.
A sad footnote to this, however, is that when the US was rewriting US-Philippine trade relations, it failed to invite us to the table.
