The United States placed Philippine exports under a 12.5 percent tariff bracket after a USTR review cited gaps in Manila’s enforcement against goods produced with forced labor.
Philippine trade officials formed an inter-agency committee to strengthen import inspections, while Ambassador Jose Manuel Romualdez confirmed Manila will negotiate with U.S. officials to lower the rate to 10 percent.
Cebu business groups, including Philexport Cebu and MCCI, warned the higher tariff disincentivizes buyers, reduces product competitiveness, and puts local jobs and micro, small, and medium enterprises at risk.
PHILIPPINE exports to the United States will face higher tariffs after Washington placed the country in a 12.5 percent tariff bracket, citing gaps in Manila’s enforcement against goods made with forced labor — a move Cebu exporters warn could weaken the competitiveness of local products and put jobs at risk.
Business groups said the higher tariff places Philippine manufacturers at a disadvantage compared with countries that qualified for the lower 10 percent rate, raising concerns over reduced export orders, slower investment, and mounting pressure on industries already grappling with high production and logistics costs.
Higher tariff tier
The Office of the United States Trade Representative (USTR) conducted a multi-month review of 60 economies to assess how trading partners prevent goods made with forced labor from entering global supply chains.
Under the policy, countries that had implemented or committed to enforcing import bans on goods produced with forced labor were assigned a 10 percent tariff. Economies deemed to have insufficient safeguards, including the Philippines, were placed in the higher 12.5 percent tariff bracket.
Philippine trade officials later formed an inter-agency committee composed of the Department of Trade and Industry, Department of Labor and Employment, and Department of Finance to strengthen inspections of imported goods. However, the committee was established only as the U.S. review concluded, leaving the Philippines unable to qualify for the lower tariff rate during the evaluation period.
Philippine Ambassador to the United States Jose Manuel Romualdez said Manila would seek to reduce the tariff to at least 10 percent through negotiations.
“We have been in continuous discussion. Technically, 12.5 percent is still much lower than the previous 19 percent, which was scrapped by the US Supreme Court,” Romualdez said.
“We are going to negotiate on the basis that we will remove the child labor goods from our list of exports if it is proven to be so,” he added.
Trade Undersecretary Allan Gepty is leading the Philippine negotiating panel, Romualdez said.
Despite the planned negotiations, Cebu business leaders said the immediate concern is the country’s higher tariff compared with competitors that secured the lower rate.
Pressure on exporters
Philexport Cebu urged the National Government to immediately engage with the USTR, warning that the higher tariff could significantly affect exporters, particularly micro, small and medium enterprises that rely heavily on the U.S. market.
“The proposed tariff could reduce the competitiveness of Philippine products in the U.S. market at a time when exporters are already coping with high production costs, expensive logistics, and intense global competition,” Philexport Cebu Executive Director Fred T. Escalona Jr. said.
Escalona said the measure could penalize exporters that already comply with Philippine labor laws and International Labour Organization standards.
“Our exporters are already facing rising production costs, elevated logistics expenses, global uncertainty and increasing competition from neighboring countries,” he said.
He warned that weaker competitiveness could translate into lower export shipments, reduced investments, and slower economic growth.
“Responsible exporters should not become unintended casualties of trade measures intended to address broader policy concerns,” Escalona said. “The Philippines shares the objective of eliminating forced labor from global commerce, but solutions should be achieved through cooperation, stronger compliance mechanisms and constructive engagement rather than measures that may adversely affect legitimate businesses and Filipino workers.”
Cebu industries at risk
The Mandaue Chamber of Commerce and Industry also called for immediate government action, saying the additional tariff would add to the burden of exporters already dealing with high electricity costs, logistics expenses, rising wages, and recurring natural disasters.
MCCI President Barbara Gothong-Tan said Cebu’s furniture, fashion accessories, processed food, and electronics industries could lose competitiveness in one of their biggest export markets, placing micro, small and medium enterprises and jobs throughout the supply chain under pressure.
She also warned that higher U.S. tariffs on Chinese goods could redirect surplus exports into markets such as the Philippines, increasing competition for local manufacturers while shifts in global trade flows could place added pressure on Cebu’s ports, logistics operators, and industrial zones.
To cushion the impact, Gothong-Tan urged the government to provide targeted support, including power subsidies for manufacturers, streamlined port logistics, and intensified efforts to diversify export markets.
Path forward for domestic trade policy
Philippine trade negotiators lead upcoming discussions with U.S. trade officials to request a rate reduction down to 10 percent. To support this effort, the newly formed inter-agency committee must demonstrate that its forced-labor monitoring protocols are functioning effectively at domestic ports.
At the local level, business groups are requesting targeted relief to preserve factory operations. Recommended measures include energy subsidies for industrial plants, streamlined customs clearance, and dedicated technical support to help small businesses verify supply chain origins.
Until national negotiators secure a lower tariff classification, Cebu’s export manufacturers must manage higher commercial costs while preserving their position in the American market. / with TPM