Trump’s 20% tariff impact on manufacturing modest — BoI

The Board of Investments (BoI) said even if the 20 percent tariff on all Philippine exports to the US would take effect on 1 August, the manufacturing sector would only be modestly affected, unlike the export sector.

The BoI earlier said the Philippine manufacturing sector in the first half improved 160 percent, or worth a total project cost of P26.6 billion, while some P33.5 billion worth of manufacturing projects are in the pipeline.

High-value sector products exempt

“The impact of the 20 percent US tariff on the Philippine manufacturing sector is expected to be moderate, with only some 17 percent of total exports to the US would be directly affected. Crucially high-value sectors such as electronics — which account for a significant share of the country’s industrial output — are largely exempt from the tariff coverage,” said BoI director Sandra Recolizado in an email interview.

“This limited exposure helps shield priority manufacturing segments from immediate disruption, allowing the country to sustain export performance in strategic industries and maintain its competitiveness in key global supply chains,” she added.

Recolizado stressed that at the onset, the 20 percent US tariff may dampen the economic momentum brought by the recent uptick in the manufacturing sector, resulting from potential lower export revenues.

Mitigating factors

Moreover, the BoI official maintained that the overall impact of the 20 percent US tariff on the Philippine manufacturing sector is expected to be contained due to several mitigating factors.

She said the strong domestic demand continues to serve as a key stabilizer for the Philippine manufacturing sector, driving production and helping cushion the impact of external shocks such as the US tariff hike.

“The resilience of local consumption provides a reliable foundation for sustained industrial activity, aligning with the government’s broader strategy to strengthen internal market linkages and build a more self-reliant, demand-driven manufacturing ecosystem,” according to Recolizado.

Aside from this, she said the Philippine government’s proactive engagement with the US on tariff negotiations reflects a strategic effort to safeguard the country’s industrial growth trajectory amid shifting global trade dynamics.

“These ongoing dialogues aim to secure more favorable trade terms, reduce long-term risks to export-oriented manufacturers, and reinforce investor confidence in the resilience, adaptability, and policy support underpinning the Philippine manufacturing environment,” she underlined.

Economic team to the US

The country’s economic team, to be led by Special Assistant to the President for Investment and Economic Affairs, Secretary Frederick Go, Trade Secretary Cristina Roque, and Undersecretaries Allan Gepty and Ceferino Rodolfo, is going to Washington, D.C., anytime soon to renegotiate the 20 percent tariff with US Trade Representative Jamieson Greer.

Malacañang Palace, on the other hand, said tariff talks will also take place when President Ferdinand Marcos and US President Donald Trump meet at the White House this coming week

“While the Philippine government remains committed to renegotiating the tariff structure with the US to pursue a better and a more mutually beneficial arrangement, it is still worth noting that the current tariff rate of the Philippines remains among the lowest in the region, next only to Singapore’s 10 percent,” Recolizado stressed.

Laos and Myanmar get the highest tariff rate from the US, with 40 percent, followed by Thailand and Cambodia (36 percent); Indonesia with 32 percent; Malaysia with 25 percent, and Vietnam and the Philippines tying at 20 percent.

Philexport concerns

The Philippine Exporters Confederation Inc., earlier aired concerns with the Philippines getting the same tariff rate as Vietnam, stressing that the latter has greater leverage compared to the Philippines.

Data from the USTR showed America’s goods trade with the Philippines totaled $23.5 billion in 2024.

Broken down, the US’ goods exports to Manila stood at $9.3 billion, while its imports amounted to $14.2 billion, resulting in a trade-in-goods deficit with the Philippines of $4.9 billion in 2024, up 21.8 percent year-on-year.