With the United States’ 90-day pause on new tariffs set to expire in mere weeks, the Philippines is preparing for potential economic repercussions, particularly in key export sectors such as semiconductors and coconut oil. Although not a primary target of Washington’s trade policy shifts, the country faces significant implications and broader volatility threats in the high-stakes global trade environment.
The temporary universal 10% tariff, enacted on April 5, 2025, replaced more country-specific rates, providing a brief window for negotiations that is now rapidly closing. Despite a comparatively lower 17% tariff rate compared to many neighboring countries, the Philippines remains vulnerable.
To address these pressing concerns, the Philippine Institute for Development Studies (PIDS) and the Bangko Sentral ng Pilipinas (BSP) recently convened a crucial policy forum titled “Seizing the Shift: Navigating Trump’s Reciprocal Tariffs” on May 26, 2025. The forum brought together experts to unpack the risks and explore strategic pathways forward.
“The Philippine economy, however, remains resilient, with inflation at a manageable 1.4% as of April 2025. This gives us extra degrees of freedom to ease monetary policy and support goal,” stated BSP Deputy Governor Zeno Ronald Abenoja, speaking on behalf of Governor Dr. Eli M. Remolona Jr., underscoring the country’s current economic stability.
Providing a global perspective, Rodrigo Balbontin of the Washington-based Information Technology and Innovation Foundation (ITIF) highlighted the escalating U.S.-China trade war’s expanding reach, drawing more nations into its orbit and intensifying global uncertainty. “The trade war, driven by geopolitical and economic tensions, risks shrinking the potential of not only the U.S. but also global economies,” Balbontin warned. He referenced the “Hamilton Index,” which tracks performance in advanced industries, noting China’s rapid ascent and the relative decline of the U.S. industrial base. Balbontin stressed that while the Philippines holds a modest share of global output, it could still feel the impact if tariffs target electronics and manufacturing inputs.
“While the Philippines is not among the most heavily targeted countries by the U.S. tariffs, the new regime threatens to disrupt key sectors, especially electronics and manufacturing components,” he added. Balbontin advocated for proactive engagement, advising the Philippines to expedite negotiations to avoid tariffs, bolster intellectual property protections, and consider increased military spending to enhance its geopolitical standing.
Dr. Rafaelita Aldaba, PIDS Emeritus Research Fellow, offered an in-depth analysis of how ASEAN countries are uniquely affected. While the Philippines and Malaysia are categorized as “moderate risk,” the Philippines’ export profile makes it susceptible to U.S. trade actions.
“Among ASEAN countries, the Philippines has one of the smallest export volumes to the U.S., but the U.S. still accounts for about 20% of our exports, primarily in electronics like semiconductors, coconut oil, and printing machines,” Aldaba explained.
She noted that these goods are among those currently facing price pressures under the existing tariff scheme. Dr. Aldaba urged the government to synchronize its trade and industrial strategies to bolster local industries’ competitiveness and resilience.
“This calls for enhanced cooperation within ASEAN to diversify supply chains and attract production relocation opportunities,” she concluded, emphasizing the need for regional solidarity and strategic diversification.
