If exports from the rest of the world cannot enter the US as smoothly as before (as a result of US President Donald Trump’s tariff offensive), they will find other markets.

As an example, if China-made cars cannot enter the US because they are priced out by the tariffs, they may sell them to a market that has a much lower tariff.

And given the proliferation of regional free trade agreements (FTAs) over the past couple of decades, the tariffs are close to, if not at, zero between the Philippines and its biggest trading partners.

The economy of China is quite weak due to several factors, including a property market slump. What is of deep concern is the overcapacity of its manufacturing industries, which is aggravated by weak consumer demand.

Mega factories need to operate at a specific capacity level to be financially viable. It is in the interest of these manufacturers to operate at the minimum and sell potentially at a lower profitability or even at a loss (but still viable). In economic terms, this would be moving towards dumping.

This is strategically important for the Philippines. We do not have a robust export sector, which means we do not earn much US dollars from our export of goods. What we do export much of is labor via our overseas workers, with their remittances contributing to a very formidable level of foreign reserves. Our reserves at $107 billion can be used to stabilize the peso’s value and, more importantly, keep us globally credit worthy.

What can chip away at our reserves is a ballooning balance of trade deficit, which means that we import more than we export. We may already be seeing some signs of this with the growing range of electric vehicles traversing EDSA and bargain consumer electronics in discount stores.

If we get a sustained influx of super cheap imports, and trade deficits become persistent, funding them becomes a strategic national concern. This leads me back to the one T from the 3Ts of Trump 2.0 — transmission or the forex.

Shocks such as President Trump’s policy changes ripple across the globe and there is always the transmission mechanism, or the link by which the effects get cascaded throughout the economy.

Finding a hedge against such shocks and ripples is a necessary component of any local investment or business strategy.

President Trump’s 3Ts make us realize that while our economy is a global economy, it can also be very tribal in nature.

In a tribal world, the possibility of a shift back to a protectionist stance is high. Despite this, the whole world has already tasted the benefits of becoming part of one tribe. It would be difficult for the whole world to put up walls even if the US puts up theirs.

Therefore, the best course of action at the moment is to recognize that while global tribes will seek what is in their best interest ahead of the others, strengthening existing alliances prepares the tribe of the Philippines for what may come with Trump.