Malacañang is urging calm as concern grows over the potential impact of a new 17% tariff the United States has imposed on Philippine exports. Officials stressed that the Philippine economy remains resilient and unlikely to slip into a recession despite the policy shift by the Trump administration.
Presidential Communications Office official Claire Castro said the administration of President Ferdinand Marcos Jr. would not allow a recession to happen. In a radio interview on Friday, she emphasized that the country’s economic strength comes largely from domestic demand.
While acknowledging the negative impact, she pointed out that the 17% tariff was still relatively low compared to rates imposed on neighboring exporters like China and Vietnam. According to Castro, this could give the Philippines a temporary edge, particularly in sectors like garment manufacturing.
Potential for growth amid global tensions
Castro said the government should capitalize on the lower comparative tariff to lure investors to Philippine industries. She emphasized that if investors saw lower tariffs here than in rival countries, manufacturing in the Philippines might become a more attractive option.
She added that the Philippines must not react aggressively to U.S. trade policies. Instead, she called for strategic adjustments. The country should enhance competitiveness, explore trade rerouting, and boost production in tariff-favored sectors.
“We just need to be more competitive,” she stated, citing the need for smarter export strategies and product diversification.
Escudero urges economic managers to brace for impact
Despite the administration’s confident tone, Senate President Francis “Chiz” Escudero advised economic officials to prepare for potential economic shockwaves. He posed several critical questions, asking whether this new tariff policy would cause a severe disruption or simply a manageable bump in the road.
Escudero cautioned against retaliatory tariffs, warning they could backfire and burden Filipino consumers with higher prices. He emphasized that tariffs are often passed on to end users, which could further strain a population already grappling with inflation.
He highlighted soybeans as an example, noting that tariffs on U.S. goods might raise feed prices and, in turn, food prices in the Philippines. He also reminded the public that one-sixth of the country’s export earnings come from U.S. trade.
In 2024, the Philippines exported $14.2 billion worth of goods to the U.S., while imports totaled $9.3 billion. This created a $4.9 billion trade surplus — a figure that could be impacted if the tariff leads to a decrease in U.S. demand for Philippine goods.
Still, Escudero expressed confidence in the country’s economic leadership. He said he trusted officials to identify opportunities in the midst of disruption and to act decisively in protecting the Philippine economy.
“Any upheaval carries opportunities,” he noted, “and I know we can spot them and use them to our advantage.”
Jaja has a degree in journalism and took classes in international law and business communication. Her career spans roles at prominent international media outlets, including International Business Times, Celebeat and Delightful Philippines. As a news editor, Jaja covered a wide range of beats, including legal, business, economy, cryptocurrency, personal finance, gaming, technology, and entertainment.