The Foreign Buyers Association of the Philippines (FOBAP) has warned of severe economic repercussions for the country’s garment industry after President Donald Trump announced a 20-percent reciprocal tariff on Philippine garment exports to the United States.
FOBAP president Robert Young described the development as a “grim scenario” for the sector, potentially leading to mass layoffs, factory closures and the collapse of long-standing export relationships.
The US is a major market for Philippine apparel, 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 in an interview. “We are already struggling to stay competitive against neighboring countries like Vietnam and Bangladesh, where labor and power costs are significantly lower.”
Young said the Philippines had previously managed to absorb a 10-percent tariff through shared cost arrangements with buyers, but the new rate makes such compromises “virtually impossible.”
The industry, already operating on slim margins, faces a potential repeat of the demise of the once-vibrant Philippine footwear industry.
FOBAP urged the Philippine government to take swift and strategic steps, including reopening negotiations with Washington to reconsider the tariff rate and investing in structural reforms to address local production inefficiencies.
Young cited the need for government-private sector collaboration to tackle long-standing issues such as outdated infrastructure, a widening skills gap, high electricity costs and uncompetitive minimum wages.
“We need to level up our capabilities to stay on the radar of global buyers,” he said.
Young was skeptical of any near-term progress on a US-Philippines Free Trade Agreement (FTA), citing Trump’s “America First” trade stance.
“Trump’s mindset under the MAGA campaign is to bring all production back to American soil. In this climate, pushing for an FTA feels like a long shot,” he said.
Despite the tariff hike, some buying programs remain in place for 2025 due to pre-scheduled shipments. However, Young admitted that future orders could be scaled back or rerouted to more competitive suppliers in the region.
“Even if other exporting countries are also hit by U.S. tariffs, they still offer lower costs overall. We need to fix the fundamentals here at home if we want to keep what’s left of this industry alive,” 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.
