MANILA, Philippines – The Philippine Institute for Development Studies (PIDS) believes that United States President Donald Trump’s “reciprocal” tariffs leaves the Philippines in a vulnerable but strategic position to reshape global trade.
A study by PIDS emeritus research fellow Rafaelita Aldaba looked into the impact of Trump’s duties on the Philippines and other Association of Southeast Asian Nations (ASEAN) members through the Tariff Exposure Composite Index (TECI).
TECI evaluates countries across five dimensions: tariff burden, exemption coverage, strategic exposure, US export dependence, and severity.
The study found that the Philippines had the smallest export footprint among four other ASEAN countries, including Vietnam, Thailand and Indonesia. Aldaba said this can be attributed to the Philippines’ relatively high dependence on the US market despite its (Philippines) low export volume.
“Our exports are mostly electronics like semiconductor media, storage devices, ICT parts, including oil, [and] printing machines. This combination of products tends to show limited product diversification,” she said.
Latest data from the Philippine Statistics Authority show that electronic products such as semiconductors accounted for $3.6 billion of exports in March. During this period, the US was Manila’s largest export market, accounting for 16.8% of the Philippines’ total exports.
Countries like the Philippines and Malaysia received strong ratings due to tariff exemptions in electronics and information and communications technology, but they also face risk from sectors that are not exempt from the levies.
For the Philippines, this includes exports such as coconut and vegetable oils.
Trump slapped a 17% levy on Philippine exports to the US, but this has been paused for 90 days since April 11.
Aldaba further explained that ASEAN countries stand to benefit from production relocations amid tensions between the US and China, but they must be prepared to welcome these investments.
“We are exporting chemicals used in electronics. And so we are better positioned to absorb the trade diversion opportunities, we are able to explore [to] track relocations of these high-tech products,” she said.
Aldaba believes ASEAN can position itself as strategic beneficiaries in the restructuring of global trade. This entails upskilling and reskilling Filipino workers so the domestic industry is better prepared for possible investments.
“So it’s important for us to be able to move up the global value chain from final assembly and testing towards more high value other stages, move towards semiconductor packaging and back-end services, diversifying our production, diversifying our trading partners would also be crucial,” she explained.
For Aldaba, these can be achieved through policy alignment, strategic investment and long-term coordination.
“A lot of countries are also strategizing and hence it’s really important for the Philippines to move quickly, move swiftly towards the implementation of our strategies,” she explained.
“We don’t want to be a passive beneficiary. What we want is for the Philippines to be a strategic player in this global economic revolution.” – Rappler.com