The Foreign Buyers Association of the Philippines (FOBAP) still raised concerns over the minor adjustment on United States’ reciprocal tariff on Philippine garments from 20 to 19 percent, saying this still poses a steep challenge for local exporters.
Following trade talks in Washington, FOBAP president Robert Young said that while the 1-percentage-point cut may appear to be progress, it barely eases the competitive pressure on Philippine exporters, especially with other countries like Vietnam maintaining similar tariff rates.
“Now that we’re at 19 percent, the question is, what’s next? Twenty percent was already a steep climb, and 19 is not much of a relief. Our competitors remain at similar levels, so we’re still facing intense competition,” he said.
Young also sounded the alarm over reports suggesting that tariffs on US goods entering the Philippines might be brought down to zero, calling the move “very unfair” and “dangerous for the Philippine economy.”
“If it’s all zero, as some have reported, it puts our agricultural sector in peril. We won’t be able to compete with cheaper imports, and that also wipes out revenue from tariffs, which we badly need to pay our mounting foreign debt,” Young said.
He said exporters are initiating talks with long-time US buyers to explore cost-sharing arrangements that would help ease the burden of the tariff through adjusted pricing.
FOBAP members also plan to shift their focus toward middle- to high-end apparel, where profit margins are wider and pricing more flexible.
Exporters are stepping up efforts to diversify beyond the US market, seeking to expand their presence in Russia, Australia, Canada, Japan, the Middle East and the European Union.
“We learned our lesson. We relied too heavily on America,” Young said, despite noting that the US remains irreplaceable in terms of volume.
“Nobody can beat the scale of the American market. That’s why we’ll continue working with them. We can’t afford to drop such major partners,” he said.
Young warned that failure to cushion the impact of the tariff regime could lead to downsizing or even closures among Philippine exporters.
He remained cautiously hopeful, suggesting a political solution might still be in play.
“This issue may already be geopolitical. Maybe Trump’s administration expects more military concessions, like more EDCA sites, in exchange for lower tariffs. It’s wishful thinking, but we’re hoping,” he said, pointing to the possibility that a change in US leadership could bring better terms.
“If Trump’s term ends and a new administration comes in, who knows, maybe these decisions will be reversed,” he said.
