PH Prepares for U.S. Tariff Shift Impact

With just weeks remaining before the U.S. ends its 90-day suspension on new tariffs, the Philippines is preparing for potential economic ripple effects as a new wave of trade restrictions looms.

The temporary 10% universal tariff, introduced on April 5 to buy time for trade negotiations, is set to expire soon, renewing uncertainty over which countries and industries will be affected most.

Although the Philippines faces a lower 17% tariff compared to some of its neighbors, key exports like semiconductors, coconut oil, and printing machines could still be caught in the fallout from shifting U.S. trade policy.

In response to these risks, the Philippine Institute for Development Studies (PIDS) and the Bangko Sentral ng Pilipinas (BSP) hosted a policy forum titled “Seizing the Shift: Navigating Trump’s Reciprocal Tariffs” on May 26, 2025.

“The Philippine economy, however, remains resilient, with inflation at a manageable 1.4% as of April 2025,” said BSP Deputy Governor Zeno Ronald Abenoja, speaking on behalf of Governor Dr. Eli M. Remolona Jr.

“This gives us extra degrees of freedom to ease monetary policy and support our goals.”

Rodrigo Balbontin of the Washington-based Information Technology and Innovation Foundation (ITIF) provided a broader global context, warning that the ongoing U.S.-China trade war is now drawing in more economies and increasing volatility.

“The trade war, driven by geopolitical and economic tensions, risks shrinking the potential of not only the U.S. but also global economies,” Balbontin said.

He pointed to the Hamilton Index, which tracks performance in advanced industries, noting China’s rapid rise and the U.S.’s relative decline.

“While the Philippines is not among the most heavily targeted countries by the U.S. tariffs, the new regime threatens to disrupt key sectors, especially electronics and manufacturing components,” he said.

Balbontin recommended proactive engagement through trade negotiations, strengthening intellectual property protections, and even considering increased military spending to bolster geopolitical positioning.

Dr. Rafaelita Aldaba, PIDS Emeritus Research Fellow, said ASEAN nations are facing varying levels of risk, with the Philippines and Malaysia falling under a “moderate risk” category.

“Among ASEAN countries, the Philippines has one of the smallest export volumes to the U.S., but the U.S. still accounts for about 20% of our exports, primarily in electronics like semiconductors, coconut oil, and printing machines,” Aldaba said.

She emphasized that these sectors are vulnerable to price pressures under the current tariff framework.

Aldaba urged the government to align trade and industrial strategies to enhance competitiveness and resilience in the export sector.

“This calls for enhanced cooperation within ASEAN to diversify supply chains and attract production relocation opportunities,” she added.

The forum’s panel discussion gathered business and policy leaders who highlighted the need for stronger public-private coordination.

They stressed the importance of supply chain flexibility, reducing overdependence on single markets, and modernizing trade infrastructure.

In his closing remarks, PIDS President Dr. Aniceto Orbeta Jr. urged unity in shaping policy responses.

“The policies we shape, the insights we share, and the partnerships we forge will define the trajectory of our nation,” Orbeta said.

“Let us commit ourselves to ensuring that the Philippines not only survives but thrives in an ever-changing world.”