The Philippines will likely gain a competitive advantage under a new U.S. tariff regime set to take effect in August 2025, according to a report by Dutch bank ING.
Deepali Bhargava, regional head of research for Asia-Pacific at ING, said “countries like India, Singapore and the Philippines, which are not on the new tariff list, may be closer to finalizing trade deals with the U.S., potentially giving them a competitive edge.”
The Philippines indicated it is working toward a “mutually beneficial framework” for trade with the United States, Bhargava said.
The U.S. remains a vital export destination for the Philippines, accounting for roughly 17 percent of its total exports as of 2024. A significant portion – about 53 percent – of these exports are electronic products, a sector in which the Philippines competes directly with countries like Vietnam and India for U.S. market share.
“Given this context, any reduction or concession on the current 17 percent reciprocal tariff rate would give the Philippines a competitive edge, particularly in electronics, and strengthen its position against regional peers,” she said.
Bhargava noted that for Asian countries, tariff rates higher than the 10-percent baseline are a worse-than-expected outcome, unless “we see successfully negotiated deals over the next three weeks.”
Sector tariffs on autos and semiconductors, in addition to base tariff rates, will be more negative for Northeast Asia, including Taiwan, South Korea, and Japan, she said.
“We are beginning to see signs of a pullback in exports in several Asian economies, after a good frontloading run in March to April. We had already factored in this expected slowdown into our outlook. However, our earlier assumptions were based on a 10 percent tariff rate. But tariffs remain a major swing factor, and the new higher tariff rates would imply that export growth could slow more sharply in the months ahead, with higher tariffs impacting global demand and rising business uncertainty,” Bhargava said.
Within ASEAN, tariffs on Thailand and Indonesia remain elevated, unchanged at 36 percent and 32 percent, respectively. Indonesia is relatively insulated due to its domestic demand-driven economy, with only about 10 percent of its exports destined for the U.S.
Thailand, however, is more exposed, given its higher trade dependence and stronger economic ties with the U.S., making it more vulnerable to prolonged tariff pressure, especially amid ongoing domestic political tensions, according to the ING report.
Malaysia saw a modest increase in tariffs, from 24 percent to 25 percent. While still positioned in the middle of the pack, Malaysia retains room for further negotiation, potentially softening the impact if diplomatic efforts prove successful, Bhargava said.
