US Imposes Tariffs on Philippine Imports Over Forced Labor Concerns

MANILA, Philippines — Philippine goods worth $6.25 billion (about P400 billion) are now subject to higher costs when entering the US market after Washington imposed a new tariff linked to forced labor concerns, trade officials said. Citing preliminary assessment, Trade Undersecretary Ceferino Rodolfo said the new 12.5-percent tariff imposed by the Trump administration could cover around 34.28 percent of Philippine exports to the US. The affected exports include labor-intensive products such as leather and travel goods, apparel, footwear and toys, Department of Trade and Industry (DTI) data showed. But Rodolfo maintained that the Philippines is still “not in a bad situation,” noting that neighboring countries face wider tariff coverage. “Indonesia is at 83 percent while Malaysia is at 40 percent. So their coverage is higher than ours. The thing is, we really want the best deal possible for our exporters,” he said in an interview over the weekend. US President Donald Trump hammered the Philippines and 59 other trading partners with fresh tariffs of 10 percent and 12.5 percent as the temporary 10-percent global tariff expired on July 24. The move followed several months of investigation into the 60 economies’ alleged lax enforcement of a ban on imported goods made with forced labor. The higher tariff is expected to put further pressure on the Philippines, whose largest export market is the US. Philippine exports to Washington reached $18.2 billion last year, based on US import data. DTI-Export Marketing Bureau director Bianca Sykimte, however, said over 60 percent of Philippine exports to the US, valued at roughly $11.98 billion, would be exempt from the new duty. These cover electronic products such as semiconductors, automatic data processing machines, integrated circuits, printers, headphones and projectors, as well as automotive and aircraft parts. The exemptions also extend to key agricultural exports, including coconut products, pineapples, bananas, mangoes, cocoa, frozen cassava, taro, pastries and biscuits. In the minerals sector, copper ores, nickel ores, cobalt ores and their concentrates are likewise exempt. In addition, goods already loaded onto vessels before the new tariff took effect on July 24 and entered for US consumption before July 28 will also qualify for exemption, Sykimte noted. In a phone interview, Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. said exporters may hold back production and defer orders until there is greater clarity on the covered exemptions. “I think the government should, for whatever it’s worth, continue negotiating,” Ortiz-Luiz told The STAR. Philippine Ambassador to Washington Jose Manuel Romualdez, meanwhile, said Manila intends to negotiate with the US over the new tariff, with Trade Undersecretary Allan Gepty set to lead the talks. Under the new tariff regime, economies that have implemented or committed to enforcing a ban on imports made with forced labor face the lower 10-percent tariff. These include Canada, the European Union, India and the United Kingdom. The Philippines, however, falls under the higher 12.5-percent duty bracket, alongside China, Japan, South Korea and dozens of other economies. According to Rodolfo, the government remains hopeful it can negotiate a lower tariff, banking on its continued engagement with the US Trade Representative. The DTI is also counting on a joint administrative order signed last week with the Department of Finance and the Department of Labor and Employment, which aims to investigate and block imports linked to unfair labor practices. “As a matter of principle, we really subscribe to the universal protection of labor rights,” Rodolfo added. “In our submissions to the US, we highlighted that we really do not have a problem in terms of the entry of goods that have forced labor components.”