EXPORTERS in Cebu, particularly those in furniture, garments, jewelry and handicrafts, are rushing to diversify away from the United States (US) and are urging the government for immediate support following the enforcement of a 19 percent reciprocal tariff on Philippine goods, with industry leaders warning of potential job losses, an economist said.
“The exporters are cramming,” said professor Ronilo Balbieran, senior economist at the University of Asia and the Pacific, during an interview on SunStar Cebu’s “Beyond The Headlines” program on Friday, Aug. 1, 2025. “They’re looking for other markets, while also seeking subsidies or unemployment support as they navigate this disruption.”
Although semiconductors, which account for around 73 percent of Philippine exports to the US, are currently exempt from the tariff under the WTO’s Information Technology Agreement, smaller exporters of furniture, garments, jewelry and handicrafts are bracing for impact. These sectors are considered high-risk due to their reliance on US buyers and sensitivity to price hikes.
Balbieran noted that the tariff increase from 17 percent to 20 percent, now down to 19 percent, threatens to reduce demand and shrink margins, especially for small businesses.
“If an American buyer sees a 30–40 percent jump in total cost due to the tariff, they may stop ordering,” he said.
The 19 percent tariff, which took effect on Aug. 1, stems from a broader US move to reset its trade terms with partners.
In response, exporters are urging the Philippine government to intensify negotiations and coordination with current and potential markets. They also seek interim financial assistance for affected firms, promote increased value-added manufacturing for exported goods and further explore the export of services.
“This is not just about exporters; this is about families and workers whose livelihoods depend on export orders,” Balbieran said, citing conversations with Cebu-based furniture and fashion accessories exporters concerned about laying off workers, during his visit to Cebu two weeks ago.
“The exporters are not just asking for handouts,” Balbieran explained. “They want help navigating this adjustment, whether it’s credit access, skills retraining, or bridge financing to shift to new markets like Japan, the EU, India, or even China.”
While it will take time for some exporters to transition to new markets, parallel efforts between the Philippine and US governments to ease compliance costs would be beneficial.
“How can we further negotiate or bring down some of the compliance costs?” Balbieran questioned. “I heard that there are so many compliance documents that exporters need to fill up before they can actually export to the US, and these require additional costs. If we can actually talk closer with our export markets, then that can actually help.”
Value-added manufacturing
But even as exporters brace for short-term pain, Balbieran sees an opening for a much-needed pivot. He said the situation presents an opportunity to push for higher value-added manufacturing.
“This is a blessing in disguise,” he said, referring to the Philippines shifting to higher value added export products. “So instead of just exporting bananas, mangoes, this is an opportunity for us to further manufacture our basic foods into higher value.”
Balbieran added that instead of basic semiconductor assembly, it could attract advanced electronics, ammunitions and solar panel manufacturing.
“It’s about moving up the value chain,” he said.
Balbieran added that the country’s future may lie not in trying to outcompete Vietnam or Indonesia on price, but in offering specialized, high-quality exports that command better margins and are less vulnerable to global price wars or tariff disputes.
Services exports
Moreover, further growing the country’s services exports is another area to focus on, whose higher-value activities are quickly gaining ground.
“You’d be surprised to know we’re growing our market in architectural renditions and engineering designs,” Balbieran said. “As architects and engineers around the world age, firms are turning to young Filipino professionals, especially in hubs like Makati and Bonifacio Global City, to deliver architectural outputs digitally.”
These services, sent abroad in the form of 3D models, building plans, or engineering blueprints, fall under a broader category known as digitally delivered services, where both order and delivery happen entirely online.
Balbieran said even social media influencers, YouTubers, TikTok creators and Google content partners are now contributing to the country’s foreign trade by earning income in dollars through global platforms.
One of the largest drivers of this digital export wave is the virtual assistant industry. Recent estimates suggest three to five million Filipinos are now working remotely for clients in the US, Europe and other markets—handling administrative tasks, customer support, e-commerce management and more.
“These are real exports,” Balbieran emphasized. “They’re earning foreign exchange, generating household income and contributing to the economy without ever crossing borders.”
A significant advantage of these services is their exemption from international tariffs, unlike goods exports that face potential barriers such as shipping costs and trade duties. / KOC