The white lights of the vendo machine enhanced the bright colors on the packages of various snacks that were seducing my brain with sweet and salty promises. Eventually, I punched the buttons and after a few seconds an electric motor whirled, and a waffle dropped into the bin below. Instinctively, I read the nutritional and manufacturing data. What struck me, however, was that this waffle was imported from Anhui Province in China, which is some 1,800 kilometers from Manila.

The waffle tasted particularly good and was offered at a very competitive price. However, this led me to wonder why this new product was sharing shelf space with our trusted home-grown snack brands, given the theoretically higher logistics and distribution costs.

It is possible that we are now feeling the second-round effects of the tariff hikes the US imposed on the world and the weakness of the Chinese economy. One of the cautionary predictions post-Liberation Day in April was that the higher tariffs would stifle demand from the US and force global manufacturing industries to shift their focus to other markets to maintain optimal production capacity. In other words, this is a form of gradual dumping.

While this can be a cause for concern and potential economic costs, there are also benefits to this. Inflation has been slowing down over the past few months, and as of July 2025, it was reported at 0.9 percent, which is quite low relative to the inflation-targeting band of the Bangko Sentral ng Pilipinas (BSP). Deflation in these economies that have excess manufacturing capacity can also be imported to the Philippines. Our consumers may benefit from this.

Zeroing in on China, we currently have the largest trade deficit with our neighbor at $2.6 billion as of year-to-date July 2025 based on data from the Philippine Statistics Authority (PSA), which is equivalent to 63 percent of the $4.0 billion balance of trade (BoT) deficit for the same period.

For the same period, imports from China also increased 17.6 percent year-on-year (y/y) to $21.9 billion in the first seven months of 2025.

The fastest growing consumer goods are passenger cars and motorcycles for durable consumer goods at 23.2 percent y/y to $4.0 billion and other non-durable consumer goods at 14.4 percent y/y to $3.6 billion in the same period.

Should we fear this increase in imports from China, which is likely feeding into our consumption growth? The risk is certainly not zero, but as an open economy that has embraced globalization early on, most of our manufacturing-based industries, particularly industry champions, are quite familiar with competition without the benefit of government subsidies or support to be globally competitive.

There was a time we exhibited a more xenophobic view of foreign consumer goods and services. This was captured in the APO Hiking Society’s song, American Junk, which comically expressed love and distrust for anything American back in the 1980s. We ended up kicking out the US military bases that altered the balance of power in the South China Sea, which we ironically are trying to recover with a restrengthening of our alliances with the West.

There is a lesson to be learned here by our American allies with respect to the Liberation Day tariff hikes. Our inward-looking policies may protect internal power blocs (or industries), but we eventually ended up reducing our influence in the region. Being the most powerful nation on earth, however, it may not be as costly for the US as much as in our case.

The lesson that we are learning is that globalization means consuming the good (treasures) and the bad (junk) alike. Rather than just filtering, we need to manage the effects of globalization based on strategic goals. There is no need to be excessively afraid of global economic powers such as the US and China, and we should focus on what truly matters—our global standing in markets and politics.