The global tariff policy declared by United States President Donald Trump, affecting both their rivals and allies, including the Philippines, might be intimidating. But economist-lawmaker Joey Salceda posits that these levies will not pose a direct challenge to the country's export competitiveness.
Salceda, a former presidential economic adviser, who currently chairs the House Committee on Ways and Means, asserted that the US slapping a 17 percent "reciprocal tariff" on the Philippines is not the "biggest hindrance," but power costs and the cost of doing business.
"We need to continue making strides in this area. The incentives under the CREATE MORE Act, especially the increased power cost deduction, help address these issues," he said.
The Philippine economy remained one of the fastest-growing economies in Asia but still lagged behind its neighbors in luring foreign direct investment owing to strict foreign ownership restrictions and high power costs, making it challenging to convince foreign investors to invest in the country.
Electricity costs in the Philippines are drastically higher than its neighbors in Southeast Asia, including Indonesia, Vietnam, Thailand, and Malaysia.
There are several contributing factors to the higher energy prices, such as reliance on imported fuel, and a less efficient energy sector, among others.
Aside from high energy costs, the cost of doing business is another component, with regulatory problems, labor expenses, and problematic bureaucratic rules that often cause delays in securing business and other relevant permits as primary drivers.
According to Salceda, the Department of Trade and Industry needs to come up with a comprehensive strategy to deal with potential disruptions in the Philippine economy, mainly in the labor-intensive textile and footwear sector.
"Ayuda (aid), job retraining, and unemployment assistance should also be ready if there are job losses in these sectors," he said.
Trump announced on Wednesday (Thursday in the Philippines) a wave of export tariffs that the US will impose across over 100 countries, which would go into effect on 9 April.
Goods and products from the Philippines that would enter America will be slapped with a 17 percent tariff. But Trump said this reciprocal tariff is much lower compared to the 34 percent that Manila charges against goods coming from the US.
A seasoned economist, Salceda stated it's surprising that the tariff rates imposed by the US on the Philippines turned out lower than expected.
Among global competitors, he emphasized that the Philippines was imposed relatively lower retaliatory tariffs, especially compared to the country's neighbor Vietnam, a US-friendly country, which was slapped with a staggering 46 percent.
Vietnam's tariff rate is much higher than tariffs imposed on China, the US’s main adversary.
"I don’t understand the geopolitical logic, and I have long given up trying. We just have to fortify our own house as much as we can," Salceda stressed.
Nonetheless, the lawmaker pointed out that the Philippines still has some opportunities to explore amid the intensified global trade war instigated by Trump.