LOCAL exporters are expressing strong dissatisfaction with the United States’ recent tariff reduction on Philippine goods to 19 percent, labeling the mere one percentage point decrease from 20 percent as “unfavorable.”
Fred Escalona, executive director of Philexport Cebu, described the 19 percent tariff as “discouraging, unfavorable,” especially given that the Philippines has “surrendered zero tariff on US automobiles.”
“We got the short end of the stick,” he said.
Philexport Cebu is the umbrella organization of exporters in Cebu.
The Cebu Chamber of Commerce and Industries (CCCI), for its part, warned that the tariff on selected Philippine exports poses a serious threat to Cebu’s export sectors, especially electronics, processed food, furniture, and fashion accessories.
The impact will be felt most by micro, small and medium enterprises, which have limited resources to absorb higher costs. CCCI also points out the unfairness of the deal, noting that US products now enter the Philippines tariff-free, putting local businesses at a disadvantage.
The chamber urges the Philippine government to act swiftly by providing relief packages, financial support, and technical help to exporters, as well as creating an export recovery task force to find new markets. CCCI stresses that urgent action is needed to protect jobs and ensure economic stability for Filipino families.
In a press statement on Wednesday, July 23, 2025, President Ferdinand Marcos Jr. described the deal as a “significant achievement” despite the modest one percentage point cut.
“One percent might seem like a very small concession. However, when you put it in real terms, it is a significant achievement,” Marcos told Philippine media before departing Washington, D.C.
Under the new trade arrangement, the Philippines will lift tariffs on American automobile imports and increase purchases of US soy products, wheat and pharmaceuticals.
“Because we have a tariff on American automobiles, we will open that market and no longer charge tariffs on that,” Marcos said. He added that increased US imports are expected to make medicines more affordable for Filipinos.
“There’s still a lot of detail that needs to be worked out on the different products and the different exports and imports,” he said.
Last April, US President Donald Trump threatened to impose a 17 percent tariff on Philippine goods entering the US market as part of his so-called “Liberation Day” tariffs. In July, he raised the rate to 20 percent, citing what he called an imbalanced trade relationship between the two countries, despite ongoing negotiations with the Philippine delegation.
Refocus on other markets
Escalona said that local exporters may need to “refocus our sights on other markets, diversify, innovate and develop new markets.” He highlighted the Philippines’ “disadvantage versus our main competitors” due to high operational costs such as “high cost of electricity, labor and little or no subsidies at all.”
Mandaue Chamber of Commerce and Industry (MCCI) president Mark Ynoc said that a one percent tariff rate reduction is “not substantial for the Philippines.”
He said the business sector, particularly exporters with US markets, had “hoped to have a much lower adjustment considering the economy is still recovering and trying to find its momentum.”
Ynoc said the current tariff will “not move the needle in attracting significant investments into the Philippines, especially in the high-tech sector like semiconductors, electric vehicles and defense technology, to name a few.” He said “the US has achieved good strides in the deal of the Philippines opening to more US goods at zero tariffs.”
Ynoc expressed hope that the Philippine “economic team can push for further reduction or give more incentives to our exporters to offset or lighten this increase.” He also said the tariff issue is expected to be a main topic at an upcoming Visayas Area Business Conference where all chambers in Visayas will converge on July 23 to 25, in Tacloban City and Palo, Leyte.
Meanwhile, former MCCI president Steven Yu believes the new US tariff negotiations “will not affect the overall trajectory of our economy from where it is now.”
Yu acknowledged that the country is “entering an era of dynamic geopolitical developments where the only constant is change,” and that “export companies who will be affected are fully aware that they should constantly explore alternative methods and markets.”
Yu said that at 19 percent, the Philippines is the “second highest in Asean,” with Singapore being the lowest at 10 percent. He emphasized that the country’s economy chiefly relies on “overseas Filipino remittances, business process outsourcing and tourism as majority revenue drivers,” suggesting that “goods exports (while still at an early stage) is not expected to have a major impact at this stage of progress.”
“Our country will surely find its place in the world stage and remains unaffected or insignificantly affected primarily because of the nature of our revenue breakdown and our being a consumption-led economy,” Yu said, adding that the Philippines “enjoys a special demographic sweet spot and a unique services export and remittance-driven, consumption-led economy.”
He said that the economy “is expected to remain resilient amidst all these changes and uncertainties,” but cautioned against complacency. /KOC