Manila will seek fresh talks with the Trump administration over Washington’s newly imposed 20 percent tariff on Philippine exports – up from the previously announced 17 percent rate, but the second lowest in ASEAN, next only to Singapore’s 10 percent.
Trade Secretary Ma. Cristina Roque said a delegation will fly to Washington next week to seek clarity and initiate negotiations in a bid to review or recalibrate the 20 percent tariff.
“We’re leaving for the US to renegotiate the tariff…We just received the official letter this morning, so our economic team still has to meet and finalize our position before we make any firm proposals,” she said.
Roque will be joined by Special Assistant to the President for Investment and Economic Affairs of the Philippines Frederick Go and undersecretaries Perry Rodolfo and Allan Gepty.
“We understand the context, but we still believe there is room to talk. We want to offer something reasonable and mutually beneficial,” Roque said.
Go said the Marcos administration is “concerned” even as certain product categories are still governed by specific US tariff schedules.
“Fortunately, most of these (covered by the 20 percent tariff) cover aluminum and steel, which are not key Philippine exports to the US,” he said.
Go reassured the public that the country’s top exports to the US – semiconductors and electronics – are currently largely exempt from the tariff hike.
“As of today, the majority of our semiconductor exports remain tariff-free, which is good news,” he added.
Philippine Ambassador to the US Jose Manuel Romualdez said the new tariff will take effect on Aug. 1, 2025.
In his letter, Trump said the US is also open to “reconsider an adjustment” if the Philippines opens its “closed trading markets to the United States,” and eliminates its “tariff, and non-tariff policies and trade barriers.”
“These tariffs may be modified, upward or downward, depending on our relationship with your country,” he said.
Trump, meanwhile, warned Manila against reciprocating the move with a tariff increase.
“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 20 percent that we charge,” he said.
“Please understand that these Tariffs are necessary to correct the many years of the Philippines’ Tariff, and Non-Tariff, Policies and Trade Barriers, causing these unsustainable Trade Deficits against the United States. This deficit is a major threat to our economy and, indeed, our National Security.”
Business groups have likewise expressed concern over Trump’s trade policy shift.
The Philippine Chamber of Commerce and Industry (PCCI) said it would have serious repercussions for local industries and workers.
“This abrupt shift poses challenges not only to exporters, but also to their value chains and the thousands of workers who depend on them,” the group said in a statement.
The group underscored the importance of improving supply chain efficiency and lowering business costs to maintain global viability.
“To thrive in a shifting global market, we must accelerate efforts in automation, logistics, and workforce upskilling…We remain hopeful that diplomacy and cooperation will lead to outcomes that are fair and beneficial to both sides,” PCCI added.
The Foreign Buyers Association of the Philippines (FOBAP) also warned of deep economic repercussions on Philippine garment exports.
FOBAP president Robert Young, in an interview, described the development as a “grim scenario” for the country’s garments and textile industry – one that could result in mass layoffs, factory closures, and the collapse of long-standing export relationships.
The US is a major market for Philippine apparel exports, with institutional buyers such as Walmart placing large-volume, long-term orders.
“With this 20 percent tariff in place, the cost disadvantage becomes unbearable,” Young said. “We are already struggling to stay competitive against neighboring countries like Vietnam and Bangladesh, where labor and power costs are significantly lower.”
The industry, already operating on slim margins, faces a potential repeat of the demise of the once-vibrant Philippine footwear industry, he said.
At its peak, the Philippine garment industry exported up to $3 billion annually. Today, it struggles to sustain $1 billion in exports, lagging behind regional peers such as Cambodia, which ships an estimated $6 billion worth of garments, and Vietnam, whose total garment exports exceed $40 billion, with over $11 billion bound for the US market.
“We’re not waving the white flag. But without immediate reforms and government support, we could be the next industry to vanish,” Young said.
Michael L. Ricafort, chief economist at the Rizal Commercial Banking Corporation, said the biggest hit of the tariff adjustment would be Philippine exporters, since the US is the country’s biggest export market, accounting for 17 percent of the total.
“Thereby could slow down Philippine exports sales/demand that, in turn, could indirectly slow down the overall economy,” he said.
