Locally-produced Japanese brands spared by U.S.-Phl’s 0% car tariff deal — BoI
‘For them to be competitive here, we expect US car companies to import bigger and higher-priced automobiles because these US car companies cannot compete with sedan-type vehicles in the Philippine market.’
Photograph courtesy of Toyota Motors Philippines/FB
With the looming flooding of the Philippines with United States car brands after President Ferdinand Marcos Jr. and US President Donald Trump agreed on zero tariffs for imported automobiles from the US, the Board of Investments (BoI) gave assurances that international brands being manufactured here, particularly Japanese cars, will not be compromised.
Japanese car manufacturers Toyota and Mitsubishi have long been manufacturing their car brands, namely Mirage and L300 for Mitsubishi, and Vios, Innova and Tamaraw for Toyota.
Bigger, higher-priced U.S. automobiles
“We will be worried if these brands are affected. Most likely, we expect that US companies, for them to be competitive here, will import bigger and higher-priced automobiles. For sure, these US car companies cannot compete with sedan-type vehicles for our market,” said BoI managing head, Undersecretary Ceferino Rodolfo, in a telephone interview on Thursday.
Further, he said the Tesla brand of US business tycoon Elon Musk is not likely to make an entry in the Philippine market, as Tesla models seen roaming around the country are not directly coming from the US, but from China.
“And if Tesla which is an electric vehicle (EV), does come in, then it will automatically enjoys zero percent duty. So those locally produced brands will not be impacted by this trade deal,” he said.
Tariff-free EVs
Currently, imported EVs are tariff-free until 2028 following Executive Order 12 of President Ferdinand Marcos Jr.
EV parts and components are also subject to lower tariffs from 3 percent to 1 percent for five years.
The tariff cut was further expanded in May 2024, covering hybrid and plug-in hybrid jeepneys, buses, cars and trucks.
However, Rodolfo said things would be different if, for example, Toyota were importing its Land Cruiser, among other models, which are not locally produced here.
“Those imports will be hit and affected, as they are not manufactured here. We are providing the same level of protection to those brands that are locally-produced and assembled in the Philippines. They will not be affected by the additional competition from US car companies, as well as those Filipino workers in the automotive and auto parts,” he said.
CARS
In 2023, the Private Sector Advisory Council announced the extension of the Comprehensive Automotive Resurgence Strategy (CARS) program for five years, which prompted Japanese carmakers with Philippine footprints, Toyota and Mitsubishi, to invest billions in 2015, to produce 200,000 units of their respective entry models, the Vios for Toyota and the Mirage for Mitsubishi for six years, starting 2018.
These car manufacturers enjoy tax incentives, as stipulated in the CARS program.
To entice more foreign car manufacturers to set up operations in the country, the Department of Trade and Industry is now gearing up to have an extension of CARS, which will be dubbed Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE).
Earlier, when it unveiled its latest Tamaraw model, Toyota said it was interested in investing anew in the RACE program, and is just awaiting the release of a Joint Administrative Order by the DTI, Department of Finance, and Department of Budget and Management.
Mitsubishi and Toyota were asked for comments, but have yet to reply.