US New Tariffs: Over 60% of PH Exports Exempt, Impact Seen Limited

MANILA, — Despite the imposition of a 12.5 percent tariff by the United States, over 60 percent of the Philippines' exports are expected to be exempt, limiting the economic impact on the country. The Department of Trade and Industry (DTI) stated that the Philippines is in a stronger position compared to many regional competitors. Washington has levied this additional duty on countries it deems to lack safeguards against the importation of goods produced through forced labor. However, Trade Undersecretary Ceferino Rodolfo assured that the tariff would "not at all" be disruptive for Philippine exporters. READ: US slaps Philippine exports with new 12.5% tariff According to the DTI, only 34.28 percent of Philippine exports to the US, amounting to $6.25 billion worth of goods, will be subject to the new tariff. The remaining $11.98 billion will remain exempt. "We're not in a bad situation. Not at all," Rodolfo said, adding, "But we want the best for our exporters." Bianca Sykimte, director of the DTI's Export Marketing Bureau, clarified that the Philippines' top exports to the US—semiconductors and electronics, as well as agricultural products—will continue to enter the US duty-free. Automotive parts, minerals, and aircraft parts are also spared from the new levy. Conversely, products covered by the new duty are those produced by "labor-intensive" industries, such as leather and travel goods, apparel, footwear, and toys. The Philippines also fares favorably against its regional peers. Based on the DTI's assessment, Sykimte noted that approximately 83 percent of Indonesia's exports to the US and about 40 percent of Malaysia's shipments are exposed to the additional tariff. Rodolfo indicated that the 12.5 percent tariff on the Philippines appears to be its "ceiling" under the US Section 301 investigation. Unlike several neighboring economies, the Philippines was not included in the United States Trade Representative's (USTR) separate investigation into structural excess capacity. This covers China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India. Nonetheless, the government continues to engage with the USTR to secure the "best deal possible" for Philippine exporters. The DTI has also secured offers from multilateral institutions and bilateral partners to support the implementation of the joint administrative order banning the importation of goods produced through forced labor. READ: US unveils new tariffs on 60 partners as Trump rebuilds trade agenda That order, issued a day before Washington announced the new tariff, created an interagency committee led by the DTI, together with the Department of Labor and Employment and Department of Finance, to establish a mechanism for investigating forced labor cases. Support from development partners will come in the form of grants and technical assistance. "They see that, at a principles level, this is something very good—that the Philippines is promoting decent work, even if the supposed forced labor happens outside the country," Rodolfo said. Rodolfo added that the USTR is already reviewing the order and has assured the Philippine government that its assessment is ongoing, meaning changes to the 12.5 percent tariff could be made "at any time." INQ