PEZA locators to face challenges due to Trump's trade barbs

Locators at the Philippine Economic Zone Authority, particularly in the IT-BPM sector, will be facing additional burdens due to the recent imposition of a 17 percent tariff by the United States on Philippine-made goods.

In a statement on Friday, PEZA said that although they acknowledge the recent imposition of the tariff mandate, announced by US President Donald Trump on Thursday (Manila time), they also recognize the challenges this tariff presents for companies that operate within its economic zones. This includes locators from the EMS-SMS and IT-BPM industries, which make up the largest share of export sales at 44.5 percent and 28.5 percent, respectively, with the US being the country’s top export destination.

With this, PEZA Director General Tereso Panga noted that they remain committed to supporting its locators and enhancing the Philippines’ competitiveness as a hub for smart and sustainable manufacturing and services.

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

“This proposal is worth considering by the US since a large 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 American consumers the most. As a sign of goodwill, the government may also offer to reduce the current duties on critical goods/services that we import from the US, following the true spirit of reciprocal tariffs,” he explained.

Nevertheless, Panga said that while the 17 percent tariff will make Philippine exports to the US more expensive, it is worth noting that this rate remains 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 investment — particularly from companies based in countries facing higher tariffs imposed by the US — seeking to reduce export costs by relocating operations to the Philippines,” according to Panga.