The sudden imposition of higher tariffs by the United States on several Asian economies could provide the Philippines with a competitive edge in the short term but may also trigger supply chain disruptions over time, according to the Federation of Ecozone Service Providers-Visayas Chapter.
“The sudden pronouncement of President Trump somehow has an effect on the trade climate in the Philippines,” said Leslie Lim, president of the group. “Though the Philippines got a little advantage with only 17% on the tariff compared to other Asian countries like Thailand, Vietnam, China, Korea, and others, at first this would give a positive impression, but in the long run, it might still give a domino effect.”
Lim pointed out that many products exported from the Philippines, particularly electronics, are unfinished goods that require further processing in neighboring countries before reaching the U.S. market.
“Some of the exported products here in the Philippines are still unfinished products that still have to be fully manufactured in other Asian countries, especially those located in Philippine economic zones,” Lim said. “If our receiving countries in Asia like Japan or Korea will slow down their exports to the U.S., then obviously this means they will lower production of semi-finished products in the Philippines.”
For fully finished products exported directly to the United States, however, Lim said the situation could present new opportunities for Philippine manufacturers. “These other Asian countries might take the option of moving their manufacturing plants to the Philippines as this will give them lower total product cost brought about by lower tariff compared to if coming from other Asian countries,” she said.
Lim added that the shift could even attract major furniture manufacturers back to the Philippines. “This might also trigger big furniture plants like Vietnam and Indonesia to come back to the Philippines, particularly Cebu, which we are globally known for before the U.S. recession,” she said.
The tariff hike, Lim noted, appears to be part of Washington’s strategy to reduce its trade deficit. “This has something to do with the trade deficit wherein he [Trump] calculated the trade difference of export and import to and from the U.S. to Asian countries using their own formula. Then such tariff rates came out,” she said. “This bold move could protect American industries and reduce reliance on foreign goods.”
Lim is also the CEO of LDL Group of Companies, one of the largest logistics groups in the Philippines.
BusinessNews.ph