Manila: While some analysts anticipate a decline in Philippine exports due to the imposed tariffs by the United States, the country's top economist offered a different perspective.
According to Philippines News Agency, in a press chat Monday, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said his office has done simulations on the impacts of the United States tariffs and it showed that the country could actually gain from President Donald Trump's order.
Balisacan said two simulations were done. First is that reciprocal tariffs, wherein the Philippines is slapped with a 17 percent tariff rate, lower than its neighboring countries. The NEDA chief said it could improve the gross domestic product (GDP) by less than 0.5 percent, while having a minimal increase in export revenues. But the impact on exports would be better under the current setup, wherein there is a 10-percent universal tariff except for China, which was slapped with a 145 percent rate.
'With the latest simulations that we've done, the increase in overall exports, not just the US, is 1.5 percent roughly. But to the US, it improved up to 2-percent increase,' Balisacan told reporters. Although tariffs are trade barriers, the huge tariff rate on China may result in trade diversion as Chinese products will be more expensive in the US market. In this case, the US-based buyers may look for cheaper alternatives like the Philippines, where products have lower tariff rates when entering the US borders. However, its impact on GDP remains limited due to the low contribution of exports to the overall economy.
According to the Philippine Statistics Authority (PSA), the country's merchandise exports to the US in 2024 reached USD12 billion, sharing 17 percent of the USD73 billion total export revenues. Balisacan said Trump's new tariff order opens an opportunity for the Philippines to expand its export markets. Balisacan said Philippine exporters should also explore other markets like the European Union, the Middle East, and India, and develop them as major trading partners.
'Just like our diplomacy, but also at the same time, we should leverage with other partners. I think the trick is for us to also ensure that our economy is not too vulnerable to any particular country. So we should, even at this point, also be developing other markets,' he said. 'We can and we should take this as a push to expand the diversity of our exports, the diversity of our export destinations, so that we don't become very vulnerable to any particular shock.'
