{"id":333163,"date":"2025-07-11T01:07:25","date_gmt":"2025-07-10T17:07:25","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=333163"},"modified":"2025-07-11T01:10:49","modified_gmt":"2025-07-10T17:10:49","slug":"commentary-us-slaps-phl-with-20-tariff-rate-now-what","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/commentary-us-slaps-phl-with-20-tariff-rate-now-what\/","title":{"rendered":"Commentary: US slaps PHL with 20% tariff rate, now what?"},"content":{"rendered":"\n

US sends out tariff letters to 7 countries, including Philippines<\/strong><\/p>\n\n\n\n

The White House has sent out the next batch of tariff letters and the Philippines was informed that a tariff of 20% will be imposed on Philippine goods entering the United States effective August 1. This is higher than the previously announced 17%, making us one of the four countries (so far) to receive a higher rate than the one announced on April 9. The other countries that received higher rates are Brunei, Japan, and Malaysia, who all had their tariffs increased by 1ppt from 24% to 25%.<\/p>\n\n\n\n

Is it a result of bad negotiations or are we just too small to bother with?<\/strong><\/p>\n\n\n\n

The US has opted to send out these letters to countries that have proven to be \u201ctoo complicated\u201d to negotiate with, like Japan, Malaysia, and South Korea, or countries that account for less than 1% of US imports. In the case of the Philippines, it seems that it is because of the latter reason.<\/p>\n\n\n\n

Impact and implications<\/strong><\/p>\n\n\n\n

Not to downplay the impact of these tariffs, but we reiterate that the Philippines is primarily a domestic consumption driven economy so reduced demand for our exports to the United States is unlikely to slow our GDP growth by more than 0.5%. To provide some perspective, the US is our top export destination but it accounted for only 16.6% of total Philippine exports in 2024, and 15.7% for the first five months of this year. <\/p>\n\n\n\n

We saw a reduction in this percentage contribution since tariffs were first announced in April, although the dollar amount remained relatively stable at around $1.0-Billion, implying that the reduction in contribution was more a function of increased exports to other countries rather than a decrease in demand from the United States. Further, the export of goods accounted for only 13.0% of the Philippine GDP in 2024 and 12.2% in 1Q 2025.<\/p>\n\n\n\n

The bigger risk<\/strong><\/p>\n\n\n\n

The bigger risk to Philippine exports comes from the potential economic downturn that these tariffs would bring to our other major trading partners who are more reliant on exports to the US. Notably, Japan, Hong Kong, China, South Korea, Thailand, Malaysia, Vietnam, and Indonesia are more export-dependent and are all being imposed with tariffs of 25% or higher. These countries combined account for more than 50% of our total exports. <\/p>\n\n\n\n

At the same time, we might find ourselves on the receiving end of products from countries seeking other markets. While this would be a win for consumers, as we would have more (and potentially cheaper) options, higher imports would increase our trade deficit. This would subtract from our GDP and can further weaken the peso. Further, the flood of cheap imported goods would increase competition for local manufacturers and put undue stress on already slim profit margins. <\/p>\n\n\n\n

Overall, we believe that these tariffs would have a small, but not insignificant, net negative effect on the Philippine economy.<\/p>\n\n\n\n

<\/div>\n\n\n\n

This report is prepared by PinoyInvestor\u2019s partner broker below. Find out more about our partner brokers<\/a> and sign up to avail their complete trading brokerage services.<\/em><\/em><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Here\u2019s a commentary on an important issue or event affecting the stock market<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1124,11],"tags":[],"class_list":["post-333163","post","type-post","status-publish","format-standard","hentry","category-commentaries-special-reports","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/333163","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=333163"}],"version-history":[{"count":2,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/333163\/revisions"}],"predecessor-version":[{"id":333167,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/333163\/revisions\/333167"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=333163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=333163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=333163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}