By The Straits Times | Created at 2025-04-04 01:02:20 | Updated at 2025-04-04 19:04:04
18 hours ago
MANILA – The Philippines seeks to cash in on the lower tariffs imposed by the US on its exports relative to its Asian neighbors and will work to improve its economic ties with its long-time ally, officials said.
Philippine Trade Secretary Cristina Roque said she’s seeking a dialogue with her US counterpart, stressing the need for “proactive engagement” with the nation’s top export market.
“We view with guarded optimism that the recent US imposition of reciprocal tariffs will provide strategic opportunities for the Philippines to improve its economic relationship with the US,” Ms Roque said in a statement on April 3.
The Philippines is striking an optimistic tone amid global anxiety over President Donald Trump’s sweeping tariff move. He imposed an 18 per cent levy on Philippine goods shipped to the US, according to the annex accompanying Mr Trump’s executive order.
Earlier, he announced a rate of 17 per cent. That is the second lowest in South-east Asia after Singapore’s 10 per cent, and smaller compared to Vietnam’s which was hit by a 46 per cent reciprocal tariff and Thailand with 37 per cent, based on the annex.
The share of exports to the Philippines’ economic output is smaller compared with its neighbors. The country’s shipments of goods and services accounted for 26.7 per cent of its gross domestic product in 2023, World Bank data show. In contrast, Vietnam’s stood at 87.2 per cent and Thailand’s at 65.4 per cent.
Ms Roque said some Philippine shipments to the US including copper ores and concentrates and integrated circuits are exempted from the reciprocal tariffs. The new levies also put the Philippines in a more “advantageous position” with exports like coconuts – with tariffs lower than Thailand’s – likely to be more competitive, she added.
“This gives us a window of opportunity. We need to look at products or services where there’s opportunity for us because of lower tariffs,” said Mr George Barcelon, head of the Philippine Chamber of Commerce and Industry.
“When buyers compute and see lower tariff on the Philippines, they will start looking into the Philippines and buy from us. Everybody in business has their eye on this tariff to see what comparative advantage we will get,” he said.
Finance Secretary Ralph Recto said the Philippines is “relatively resilient against trade wars” since its economy is mainly driven by domestic demand.
But “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 and higher interest rates and inflation, he said in a statement.
The Philippines could expand its share of the US market for garment exports, with major competitors like China, Bangladesh, Vietnam, Mexico, and India facing higher tariffs, Mr Recto said. Manila may also boost its US market for coconut-based products, he added.
The government’s initial analysis shows the direct impact of US tariffs may be “less substantial” compared to other Asean nations, Ms Roque said.
The US accounted for 17 per cent of the Philippines’ exports last year with electronic products comprising more than half of shipments. It also supplies about 20 per cent of the Philippines’ agricultural imports, she said.
Ms Roque aims to meet her US counterpart to talk about boosting trade relations between both countries. Among areas that Manila aims to discuss include enhancing market access “for its key export interests, such as automobiles, dairy products, frozen meat, and soybeans, within the framework of a bilateral free trade agreement,” she said.
US trade with the Philippines totaled around US$23.5 billion (S$31.4 billion) in 2024, with Washington recording a deficit of US$4.9 billion with Manila, up 22 per cent from 2023, according to US government data.
The Philippine peso strengthened to its strongest level against the US dollar in almost six months, as the tariff announcement spurred weakness in the greenback. Manila’s benchmark stock index closed 1.6 per cent lower amid a broader decline in equities in the region.
Philippine exporters may raise prices following the imposition of the US tariffs. “If all our competitors are given tariff or even higher than ours, then we just increase our price,” Philippine Exporters Confederation President Sergio Ortiz-Luis Jr. said. He said products that will be affected include electronics and agriculture items. BLOOMBERG
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