THE PRESIDENTIAL PALACE on Thursday raised alarm over the US decision to extend tariffs on Philippine exports to twenty%, as a high-level delegation prepares to fly to Washington next week to hunt adjustments.
The Philippine Exporters Confederation, Inc. (Philexport) also expressed concern in regards to the country’s shrinking trade leverage with the US after US President Donald J. Trump’s move to hike tariffs from the “Liberation Day” rate of 17%.
“We’re concerned that, notwithstanding our efforts and constant engagements, the US still decided to impose a 20% tariff on Philippine exports,” the Trade department said in a separate statement.
Still, Frederick D. Go, special assistant to the President for investment and economic affairs, said the brand new tariff stays the “second lowest” amongst Association of Southeast Asian Nations (ASEAN) member states, next to Singapore’s 10%.
Mr. Trump first announced the sweeping tariff changes on April 2 — dubbed “Liberation Day” — and implemented a 90-day pause that ended on July 9.
The US President said in posts on his Truth Social media platform that starting Aug. 1, he would impose a 20% tariff on goods from the Philippines, 30% on goods from Sri Lanka, Algeria, Iraq, and Libya, and 25% on Brunei and Moldova.
Mr. Go said the Philippine government is pursuing further negotiations.
“We remain committed to continuing negotiations with america in good faith to pursue a bilateral comprehensive economic agreement or, if possible, a free trade agreement,” he told a news briefing.
The delegation — composed of Mr. Go, Trade Secretary Ma. Cristina A. Roque, Trade Undersecretary Ceferino S. Rodolfo and Trade Undersecretary Allan B. Gepty — is scheduled to go to Washington from July 14 to 18.
“The economic team and the Department of Trade and Industry will proceed to advance key economic reforms to sustain a competitive and investor-friendly business environment,” Mr. Go said, citing the necessity to construct more global trade ties.
Philippine Ambassador to the US Jose Manuel “Babe” G. Romualdez said the Philippines would seek to lower the duty, which stays among the many lowest reciprocal duties in Southeast Asia.
“We’re still planning to barter that down,” he said in a text message.
‘UNILATERAL IMPOSITIONS’
The Philippine Trade department said it understands the US concerns about trade imbalances and its push to spice up local manufacturing.
“Nonetheless, global supply chains are deeply interconnected, and unilateral trade impositions may have hostile effects on the worldwide economy,” it said. “Thus, we imagine in the necessity for constructive engagement to deal with trade issues.”
US goods trade with the Philippines reached about $23.5 billion last 12 months, in keeping with data from the Office of america Trade Representative. US exports to the Philippines stood at $9.3 billion, a 0.4% increase from 2023, while imports from the Philippines hit $14.2 billion, up 6.9% 12 months in 12 months.
The resulting US goods trade deficit with the Philippines widened to $4.9 billion in 2024, a 21.8% increase from a 12 months earlier.
Finance Secretary Ralph G. Recto, for his part, said the Philippines doesn’t plan to retaliate. “Trade negotiations are ongoing. [There are] no plans to extend tariffs on US imports,” he told BusinessWorld in a text message.
Despite the upper levies, Mr. Recto said the economy remains to be expected to grow by 5.5% to six.5% this 12 months.
Philexport President Sergio Ortiz-Luis, Jr. described the US tariff hike as “very unlucky.”
“We don’t mind the rise from 17%, except the undeniable fact that a few of our major competitors have their tariffs decreased, especially Vietnam, which is at the identical level with us,” he told BusinessWorld by telephone.
The group expressed concern that the Philippines might now not have the ability to supply trade concessions without hurting local industries.
Mr. Ortiz-Luis noted that other countries currently negotiating with the US enjoy more bargaining power.
“Unfortunately, they’ll negotiate because they’ve leverage that we wouldn’t have because now we have given them up already,” he said. “We’ve given the US [military] bases, they’re putting ammunition here, we’re buying used equipment from them, however the others aren’t.”
Mr. Ortiz-Luis urged the federal government to take the export sector and micro, small, and medium enterprises (MSME) more seriously, warning that the US tariff could still change before Aug. 1.
“It has up to now been just lip service when it comes to product development, joining international trade, and marketing,” he said. “No funding that matters is coming from the federal government.”
“Those are the things which can be being forgotten… These are investments that we cannot afford to miss,” he added.
He also said any future talks with the US should highlight the country’s limited export volume.
“We cannot offer anything anymore. I cannot consider anything we are able to offer on the trade side, except things that can probably affect our agricultural imports from the US,” Mr. Ortiz-Luis said.
As a substitute of focusing solely on the tariff hike imposed by the US, the federal government should direct its efforts toward export product development and market diversification, he said.
Despite the 20% tariff, he stays optimistic that the country could still meet its revised export goal.
“We’ve already abandoned the Export Development Council’s goal. What we’re using now could be the PDP goal, and I feel we are able to still achieve that,” Mr. Ortiz-Luis said, referring to the $113.42-billion export goal under the Philippine Development Plan (PDP).
Foreign Buyers Association of the Philippines (FOBAP) President Robert M. Young said Manila should negotiate with Washington for a ten% tariff.
“Second is the oft-repeated call for the drastic improvement to level up our production capabilities and ease in doing business with the intention to compete and still remain on the radar of US buyers,” he said by telephone.
The 20% tariff could lead on to weaker exports, slower economic growth, employment risks and investment uncertainty, Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said in a Viber message.
“Consider diversifying export markets, exploring US-based manufacturing partnerships, and leveraging ASEAN trade networks,” Mr. Ravelas said.
He also called for an acceleration in free trade agreement talks to cushion the economic impact of the tariff hike.
Semiconductor and Electronics Industries within the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said further clarification is required on the character of the upper US tariff.
“There remains to be a must make clear if the 20% is reciprocal or the whole tariff,” he said.
‘WAKE-UP CALL’
The Philippine Chamber of Commerce and Industry (PCCI) said the 20% tariff could hurt local industries.
“This development underscores the importance of diversifying our export markets, strengthening regional trade partnerships and investing in domestic competitiveness,” PCCI President Enunina V. Mangio said in a Viber message.
She urged the federal government to spice up its support for local industries amid mounting global trade pressures.
Ser Percival K. Peña-Reyes, director on the Ateneo Center for Economic Research and Development, said the 20% duty is “still relatively lower” than most Philippine neighbors “so there’s still the potential to draw businesses from elsewhere.”
But investors won’t are available in unless the Philippines boosts competitiveness, he said in a Viber message. He said tax holidays, reduced corporate income taxes, duty-free importation of apparatus and raw materials and subsidized infrastructure could attract investments.
Meanwhile, former Tariff Commissioner George N. Manzano said the Philippines stays in a comparatively higher position than other export-driven economies attributable to the lower tariffs and the exemption of key products like semiconductors.
“It’s probably not as problematic as other countries that export, like possibly Bangladesh — it exports a whole lot of garments, which aren’t exempted,” he said by telephone.
Trade Justice Pilipinas said the upper US tariffs should function a “wake-up call” not just for the Philippine government but in addition for the broader ASEAN.
“Today’s tariff hike isn’t only a trade issue; it exposes the deep flaws of an export-dependent development strategy that leaves our economy on the mercy of worldwide markets and the political whims of foreign leaders,” it said in an announcement.
The group urged the Philippines to make use of the moment as a chance to strengthen ties with regional neighbors.
The recent announcement should compel the Philippines to rethink and deepen regional solidarity with ASEAN, it added. — Chloe Mari A. Hufana, Justine Irish D. Tabile and Aubrey Rose A. Inosante with Reuters