The Management Association of the Philippines has expressed deep concern over the imposition of a 17-percent tariff on US-bound Philippine exports as announced by US President Donald Trump.

This even as economic managers, including Special Assistant to the President for Investment and Economic Affairs, Secretary Frederick Go, saw the reciprocal tariffs as beneficial to the country rather than a huge burden, especially for Philippine exporters of goods to the US.

“While our country at this time is seen as not as negatively affected as the others, with the global economy being an integrated ecosystem, we cannot discount the possibility that as other countries are affected, it may prosper into a contagion that will eventually affect us,” MAP said in a statement on Friday.

“This is a reality that will spread across many countries and will clearly have varied economic impacts on each nation,” the MAP statement, signed by its president Alfredo Panlilio, said.

To address this, the group has urgently requested the appropriate government agencies, namely, the Department of Trade and Industry, Department of Foreign Affairs, Department of Finance, Department of Labor and Employment, National Security Council, National Economic and Development Authority, Philippine Economic Zone Authority, and the Anti-Red Tape Authority to consider the impact of the new global order on the Philippines’ economic security.

“As many countries have already done in anticipation of these developments, we recommend the formation of an Economic Security Council under the Office of the President to be composed of the above-named government agencies together with the appropriate private sector and industry representatives,” MAP said.

Key partners

“Many foreign governments have acknowledged the value and effectiveness of having their respective private sectors and industries as key partners to address these new challenges,” MAP added.

The business group suggested the Economic Security Council be composed of individuals with extensive diplomatic, economic and industry expertise.

“The council’s main tasks would be to compile data and information, analyze their correlation and impact on our economy, and recommend risk-mitigating measures for the affected industries. It can also identify opportunities and alternative markets that these developments will provide for our economy and businesses. It can provide important scenario modeling analysis to help the President and the Executive Branch develop strategies, and in negotiations with other governments in dealing with the new realities of international trade,” MAP said.

Impact on PEZA locators

Meanwhile, locators at the Philippine Economic Zone Authority, particularly in the IT-BPM sector, will be facing additional burdens with the imposition of the 17-percent tariff by the United States on Philippine-made goods

In a statement on Friday, PEZA said that although they acknowledge the imposition of the tariff, PEZA recognizes the challenges this presents to companies operating in its economic zones.

PEZA locators from the EMS-SMS (Electronics Manufacturing Services-Semiconductor Manufacturing Services) and IT-BPM (Information Technology-Business Process Management) industries have the biggest share of export sales at 44.5 percent and 28.5 percent, respectively, with the US as their top export destination.

PEZA Director General Tereso Panga said they remain committed to supporting the locators and enhancing the Philippines’ competitiveness as a hub for smart and sustainable manufacturing and services.

Given the strategic importance of the IT-BPM and EMS-SMS sectors, as they account for the biggest exports to the US and are the major generators of quality jobs in the country, Panga said the government may lobby for a reduced tariff for the exports of electronics-semiconductor products and IT-BPM services.

“This proposal is worth considering by the US since a big number of our EMS-SMS and IT-BPM investors are American companies that provide critical support to their principals and major clients in the US, and whose products and services benefit most the American consumers. As a sign of goodwill, the government may also offer to reduce the current duties on critical goods and services that we import from the US following the true spirit of reciprocal tariffs,” Panga explained.

Lowest in Southeast Asia

Nevertheless, Panga said, while the 17-percent tariff will make Philippine exports to the US more expensive, it is worth noting that this rate is among the lowest in Southeast Asia.

In contrast, neighboring countries such as Vietnam (46 percent), Thailand (36 percent), Indonesia (32 percent) and Malaysia (24 percent) face significantly higher tariffs.

“This comparatively lower rate highlights the strong economic ties between the Philippines and the US, and positions the country more favorably than its regional counterparts. PEZA sees this as an opportunity to attract greater investments, particularly from companies based in countries with higher US tariffs seeking to reduce their export costs by relocating their operations to the Philippines,” Panga said.