Noting of the very modest reduction in the U.S. reciprocal tariffs to 19 percent from 20 percent, the Philippine Chamber of Commerce and Industry (PCCI) has called on government to look closely into logistics and non-tariff barriers (NTBs) that are hurting domestic producers.
NTBs are trade restrictions that aren’t tariffs, import duties, or taxes. They can include a wide range of measures that hinder or restrict international trade, often by increasing costs or limiting the quantity of goods that can be imported. NTBs include sanitary and phytosanitary (SPS) measures, quotas and import licensing, bureaucratic delays and customs procedures, local content requirements, among others.
Meantime, the Philippine logistics cost represents 27 percent of a company’s sales revenue, significantly higher than many of its Southeast Asian neighbors where logistics costs average around 16 percent of sales, according to International Finance Corp.
PCCI President Enunina “Nina” Mangio emphasized that broader factors like overall economic demand, global competition, logistics costs, production challenges (infrastructure, input costs, bureaucratic efficiency), and non-tariff barriers (NTBs) often have a far greater impact on export volumes than a single percentage point tariff change.
“Every percentage point counts,” Mangio said adding, “While a 1 percent reduction is modest, it translates directly to lower costs of Philippine products in the US market versus those of other countries that are facing higher tariffs; provides exporters a bit more flexibility in pricing negotiations; and, particularly for micro, small, and medium enterprises (MSMEs), can translate to meaningful cost savings, stronger profit margins, and improved price competitiveness.”
PCCI also believes that while the reduction is helpful, it is not a game-changer. “Realistically speaking, a 1 percent reduction is unlikely to trigger a massive surge in exports. The impact will be most felt by specific industries already exporting the affected goods,” Mangio said.
PCCI called on government to continue efforts to negotiate deeper and more comprehensive tariff relief across a wider range of product lines, as well as to address NTBs. And to aggressively implement domestic reforms to improve doing business and trade, lower logistics and energy costs, promote digital infrastructure and provide international trade incentives to strengthen competitiveness, improve productivity and build a resilient and inclusive economy.
“We hope this is just the start,” Mangio said as she urged the Philippine government to negotiate for more product coverage for reduced tariffs; tackle regulatory hurdles such as sanitary and phytosanitary (SPS) measures and standards recognition, which can be more significant obstacles than tariffs themselves; revisit discussions on a more comprehensive bilateral trade agreement or deeper integration under existing frameworks like the Indo-Pacific Economic Framework (IPEF); and, negotiate for the expansion of trade preference programs like the GSP (Generalized System of Preferences).
