PH braces for impact as US tariff suspension nears its end

WITH just weeks left before the US ends its 90-day pause on new tariffs, the Philippines is bracing for possible economic shocks. While the country isn’t at the top of Washington’s target list, its key exports, such as semiconductors and coconut oil, could face pressure from America’s shifting trade policy.

The temporary universal 10 percent (%)  tariff, introduced on April 5, replaced the more country-specific rates and gave negotiators some time. But the window is closing fast.

While subject to a comparatively lower 17% tariff than many neighboring countries, the Philippines still faces significant economic implications and broader volatility threats amidst this high-stakes environment.

To unpack the risks and explore ways forward, the Philippine Institute for Development Studies (PIDS) and the Bangko Sentral ng Pilipinas (BSP) co-hosted a policy forum, “Seizing the Shift: Navigating Trump’s Reciprocal Tariffs,” on May 26, 2025.

“The Philippine economy, however, remains resilient, with inflation at a manageable 1.4% as of April 2025. This gives us extra degrees of freedom to ease monetary policy and support goals,” said BSP Deputy Governor Zeno Ronald Abenoja, speaking on behalf of Governor Dr. Eli M. Remolona Jr.  

Trade war impact

Rodrigo Balbontin of the Washington-based Information Technology and Innovation Foundation (ITIF) presented a sobering view of the broader picture: the U.S.-China trade war is now drawing more countries into its orbit and intensifying global uncertainty.

“The trade war, driven by geopolitical and economic tensions, risks shrinking the potential of not only the U.S. but also global economies,” he said.

Balbontin highlighted the “Hamilton Index,” which tracks how countries are performing in advanced industries.

It shows China’s rapid ascent while the U.S., once a powerhouse, is seeing the relative decline of its industrial base.

He noted that while the Philippines holds only a modest share of this global output, it could still feel the heat if tariffs hit electronics and manufacturing inputs.

“While the Philippines is not among the most heavily targeted countries by the U.S. tariffs, the new regime threatens to disrupt key sectors, especially electronics and manufacturing components,” he said.

Balbontin urged proactive engagement, recommending that the Philippines accelerate negotiations to avoid tariffs, strengthen intellectual property protections, and consider increased military spending to enhance geopolitical positioning.

Navigating  tariff risks in PH, Asean

Dr. Rafaelita Aldaba, PIDS Emeritus Research Fellow, broke down how Asean countries are being affected differently. While the Philippines and Malaysia fall under a “moderate risk” category, the country’s export profile makes it vulnerable to US trade actions.

“Among Asean countries, the Philippines has one of the smallest export volumes to the U.S., but the U.S. still accounts for about 20% of our exports, primarily in electronics like semiconductors, coconut oil, and printing machines,” Aldaba said.

She explained that these goods are among those facing price pressures under the current tariff scheme. Aldaba urged the government to align its trade and industrial strategies to help local industries become more competitive and resilient.

“This calls for enhanced cooperation within Asean to diversify supply chains and attract production relocation opportunities,” she added. PR