Opportunities, concerns raised over Trump’s reciprocal tariff
The United States imposed a 17 percent reciprocal tariff on the Philippines, one of the lowest rates among affected nations and the second lowest for Southeast Asian countries, following Singapore’s 10 percent.
Malacañang said the move of the Trump administration presents both challenges and opportunities for the local economy.
Presidential Communications Office Undersecretary Claire Castro said initial assessment from the Department of Trade and Industry suggested the impact will be minimal.
“This 17 percent tariff could actually be seen as a good development, considering that many other countries have been hit with much higher rates,” Castro said.
“Since our tariff rate is among the lowest, we believe this is still a manageable situation,” she added.
The US has imposed higher tariffs on Vietnam (46 percent), Thailand (36 percent), Indonesia (32 percent), Malaysia (24 percent), and Cambodia (49 percent).
While the tariff may lead to higher costs, Castro said it could also position the country as an attractive destination for foreign investors, particularly those from countries facing steeper US levies.
“If this policy remains in place, we may see more investors choosing the Philippines as a manufacturing hub because of the lower tariff,” she said. “It can have both negative and positive effects.
She said the DTI and the Department of Finance are evaluating whether the tariff increase will significantly affect Philippine exports to the US.
The Philippines could be a hub for global value chains, particularly in industries like electronics, textiles, food, and automobiles, the Department of Finance said.
With the country’s global comparative advantage in coconut oil, the DOF said the Philippines is also well-positioned to expand its market share in the US for coconut-based products, including desiccated coconut and copra meal/cake.
The United States remains a key export market for the Philippines, accounting for about 17 percent of total exports as of 2024.
Notably, electronic products make up 53 percent of Philippine exports, and overall, the US represents approximately 10 percent of total trade, Trade Secretary Ma. Cristina Roque said.
“We view this situation as an opportunity to further strengthen our strategic partnership with the US. Our focus is on collaborating to secure and enhance supply chains, improve the efficient flow of goods, and boost economic security for both nations,” Roque said.
Finance Secretary Ralph Recto added the Philippine economy remains relatively resilient amid global trade shifts, with the government leveraging the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act to attract more investors to locate in the country.
“The Philippine economy is primarily driven by domestic demand rather than exports. This makes us relatively resilient against trade wars. However, as with all countries, we are not spared from the impact of the expected decline in international trade and possible slowdown of global growth due to supply chain disruptions, higher interest rates, and higher inflation,” he said.
“Nevertheless, the CREATE MORE Act will strengthen our ability to attract investors looking to expand or relocate to the Philippines, given the relatively lower tariffs imposed on our exports to the United States. We are also actively pursuing more free trade agreements with our global partners,” Recto added.
For its part, the country’s premier group of exporters, the Foreign Buyers Association of the Philippines (FOBAP), expressed concern over the tariffs saying these would likely lead to higher costs for imported goods from the Philippines to the US.
“Importers will pass on these additional tariffs to the selling price in the US. Consumer behavior suggests that people may opt not to buy anymore,” said FOBAP president Robert Young.
He said the Philippines may face difficulties in securing export orders due to diminished or non-existent demand.
“This would lead to factory closures in the Philippines, and a loss of foreign revenues and employment opportunities,” he added.
On the other hand, Philippine Exporters Confederation, Inc. (PhilExport) president Sergio Ortiz-Luiz viewed the tariffs as potentially beneficial.
“If we have lower tariffs compared to our competitors, it doesn’t necessarily mean that this will be bad for us. In fact, it could be an opportunity. All we need to do is adjust our prices. Our competitors, facing higher tariffs, will become less competitive than us,” he said.
The resident economist of the House of Representatives, Albay Rep. Joey Sarte Salceda, likewise looked at the positive side of Washington’s decision to impose tariffs on all nations.
“Sovereign countries can do as they please with their trade policy. I’m frankly surprised the tariffs rates imposed on us turned out lower than I expected,” said Salceda in a statement.
“Among our competitors, the Philippines was imposed relatively lower retaliatory tariffs, so there are, possibly, some opportunities to explore,” he said. “We just have to fortify our own house as much as we can.”
Senate President Francis Escudero called on the country’s economic managers craft immediate contingency plans to cushion potential economic effects of the 17 percent tariff and ensure a calibrated response that protects local industries and consumers.
“Any tariff raised is a pass-on tax to our already overtaxed people,” he said.