In the spirit of true reciprocity, the Philippine government should lobby the Trump administration for reduced sectoral tariff on the exports of its electronics-semiconductors and IT-BPM services and at the same time offer lower duties on critical goods/services that it import from the U.S.
Tereso O. Panga, director-general of the Philippine Economic Zone Authority (PEZA) raised this proposal following the imposition of the 17 percent reciprocal tariff by Trump on Philippine exports, thereby making the sector’s export to the U.S. more expensive.
As a sign of goodwill, he said, “The government may also offer to reduce the current duties on critical goods/services that we import from the U.S., following the true spirit of reciprocal tariff.”
“This proposal is worth considering by the US since a big number of our EMS-SMS and IT-BPM investors are American companies that provide critical support to their principals and major clients in the U.S.—and whose products and services benefit most the American consumers,” he said.
Given the strategic importance of the IT-BPM and EMS-SMS sectors as they account for the country’s biggest exports to the U.S. and are the major generators of quality jobs in the country, Panga urged the government to lobby for a reduced tariff (sectoral) for the exports of electronics-semiconductor products and IT-BPM services to the U.S. market.
The EMS-SMS and IT-BPM industries have the biggest share in export sales at 44.5% and 28.5%, respectively, among PEZA ecozone locators, with the U.S. being the country’s top export destination.
On April 2, 2025 (April 3 in Manila), Trump announced “Liberation Day” tariffs on their trading partners, including the Philippines.
Nonetheless, Panga said that the Philippine economic zones, home to the country’s single largest exports sector – semiconductor and electronics — should become a more attractive location for companies located in countries imposed with higher tariffs by the Trump administration.
“PEZA sees this as an opportunity to attract greater investment—particularly from companies based in countries imposed higher tariffs by the U.S.—seeking to reduce export costs by relocating operations to the Philippines,” said Panga.
While the 17 percent tariff will make Philippine exports to the US more expensive, Panga noted this rate remains among the lowest in Southeast Asia. In contrast, neighboring countries such as Vietnam (46%), Thailand (36%), Indonesia (32%), and Malaysia (24%) face significantly higher tariffs. “This comparatively lower rate highlights the strong economic ties between the Philippines and the U.S., and positions the country more favorably than its regional counterparts,” he said.
Already, Dan Lachica, president of the Semiconductor and Electronics Industries Foundation of the Philippines Inc. (SEIPI), said that two – American and Chinese — medium EMS firms are exploring the Philippines as their alternative location.
Recognizing the evolving global trade environment, PEZA is proactively promoting the Philippines under the “China+1+1” strategy. This encourages businesses to maintain operations in China while diversifying their supply chains by expanding into the Philippines. Coupled with recent positive developments, including the Philippines’ participation in the Regional Comprehensive Economic Partnership (RCEP), intra-ASEAN trade, the impending renewal of the European Union Generalized Scheme of Preferences (EU GSP), and the enactment of the CREATE MORE Act, PEZA believes these measures will mitigate the tariff impact and make the Philippines an even more attractive investment destination.
