Economy taking P94.5-B hit from Trump tariff blitz

Initial estimates that the DAILY TRIBUNE collected place the potential loss to the economy of up to $1.89 billion (P94.5 billion) a year as a result of the 17 percent tariff US President Donald Trump imposed on the country.

The losses will be in terms of weaker exports, with manufactured goods, especially mechanical and electrical equipment, bearing the brunt due to their current low or zero tariff status in the US market.

The new tariff on exports was part of the US government's sweeping “Liberation Day” trade policy that targeted over 180 countries.

The levy announced on 2 April via Trump’s Truth Social account, will take effect on 9 April.

The country's Southeast Asian neighbors face significantly higher tariffs, Vietnam at 46 percent; Thailand at 36 percent; Indonesia at 32 percent, and Malaysia at 24 percent.

The tariff slapped on the country was higher than that on Singapore, with 10 percent.

China was imposed a 34 percent reciprocal tariff, while the European Union will deal with 20 percent.

An analyst said the Philippines could face a substantial decline in electronics, semiconductors, machinery, and agricultural products, mostly coconut oil and seafood, exports to the US.

This vulnerability stems from the Philippines’ reliance on the US, which accounted for nearly 16 percent of its total exports in early 2025.

However, trade diversion could offset some losses, with a net reduction possibly closer to $1.6 billion if the Philippines redirects goods to alternative markets like China, ASEAN countries, or Europe.

Tariffs would increase the cost of Philippine goods in the US, potentially reducing demand.

The Philippines is deeply integrated into global supply chains, particularly in electronics and intermediate goods.

Sweeping US tariffs could disrupt these networks, especially if they trigger retaliatory measures from other nations or shift production away from US-reliant markets.

While the Philippines might not benefit significantly from high-technology supply chain shifts due to its focus on assembly rather than cutting-edge production, it could see opportunities in lower-value activities like packaging if other countries face steeper tariffs.

Remittances, peso may weaken

The US is a major source of remittances for the Philippines, with millions of Filipino workers sending money home, and analysts fear if tariffs are paired with stricter US immigration policies, such as a crackdown on migrants, remittance inflows will be reduced.

Weak dollar inflows might depreciate the peso, increasing the cost of imports and fueling inflation, though it could also make exports more competitive if managed carefully.

Trump’s tariffs should push the Philippines to accelerate its industrialization, an economist said.

By reducing reliance on US markets and building domestic capacity, the Philippines could mitigate long-term risks from global trade shocks.

While the Philippines imports less from the US about 6 percent to 7 percent of total imports, compared to its exports, tariffs could still raise the cost of US-sourced goods like machinery, agricultural inputs, and consumer products.

This might contribute to inflation, squeezing household budgets and slowing private consumption, a key driver of Philippine GDP growth.

Geopolitical and trade realignment

The tariffs could nudge the Philippines closer to China or ASEAN partners as it seeks to diversify trade. This shift might strengthen regional ties but could complicate its diplomatic balancing act between the U.S. and China, especially amid tensions in the West Philippine Sea.

Negotiating new free trade agreements with Canada, Europe, or Middle Eastern countries has also been proposed as a buffer.

Economic managers have already widened its 2025 growth target to 6 percent to 8 percent from 6.5 percent to 7.5 percent, reflecting uncertainty from Trump’s trade policies.

Analysts from Moody’s Analytics and S&P suggest the impact might be moderate compared to more China-exposed neighbors like Vietnam or Malaysia, thanks to the Philippines’ domestic orientation and trade surplus with the US.

However, a prolonged trade war could drag growth below these targets, especially if global demand weakens.

In summary, the profound effects on the Philippine economy would likely include export declines, supply chain challenges, and inflationary pressures, tempered by potential opportunities for trade diversification and industrial development.

The net outcome depends on the tariffs’ specifics, global retaliation, and the Philippines’ policy response, whether it doubles down on US ties or pivots to new markets and self-reliance.