Philippine Exporters Grapple with Uncertainty Amid New US Tariff Policy
A leading official from the Philippine Exporters Confederation Inc. (Philexport) has revealed that exporters are currently evaluating the potential repercussions of the recently imposed 10 percent blanket tariffs by US President Donald Trump. The shifting trade landscape is being described as both confusing and unsettling for the industry.
Exporters Feel Insecure and in Limbo
In a February 24 interview, Philexport president Sergio R. Ortiz-Luis Jr. expressed that domestic exporters are feeling "insecure" and "in limbo" as they await further clarity on how the new levy will be applied to Philippine goods. This uncertainty stems from Trump's executive order signed on February 20, which introduced a 10 percent global tariff on imported products, effective from February 24. The move followed a US Supreme Court ruling that invalidated previous sweeping duties, and Trump has additionally threatened to increase the tariff to 15 percent.
Historical Context and Current Confusion
Ortiz-Luis highlighted that it remains unclear how this new measure will impact Philippine exports. He recalled a previous instance when the Philippines faced a 19 percent tariff, yet exports unexpectedly grew. This was largely due to exemptions for key products such as electronics and agricultural goods, which constitute the majority of shipments to the US. These exemptions enabled the country to surpass export projections last year.
However, with the new 10 percent tariff, there is confusion over whether the Philippines is included, especially since Manila had previously signed an agreement with Washington stipulating a 19 percent rate on certain products. "We don't really know what will happen. We are in limbo," Ortiz-Luis stated, emphasizing the lack of clarity.
Proactive Measures and Government Support
To mitigate the impact of higher tariffs, the Philippines has been pursuing several strategies since last year. These include:
- Market diversification efforts
- Negotiations for additional trade agreements with countries like Canada and Middle Eastern nations
- Ongoing engagement with the US
Malacañang has previously affirmed that the Philippines will maintain close bilateral relations with Washington despite these policy shifts.
Calls for Enhanced Government Assistance
Ortiz-Luis has urged the government to provide more concrete support to exporters, particularly in areas such as:
- Financing access
- Trade promotion budgets
- Product development
- Participation in overseas trade fairs
He pointed out that the Philippines lags behind Southeast Asian counterparts like Thailand, Malaysia, and Indonesia, which send large, well-funded delegations to major trade exhibits. In contrast, Philippine exporters often bear their own costs, with only a limited number able to participate.
Challenges in Banking and Regional Standing
Additionally, Ortiz-Luis cited limited bank lending to exporters due to perceived risks, describing the sector as among the most underbanked in the region. This financial constraint further complicates the ability of exporters to navigate the uncertain trade environment and compete effectively on the global stage.
