Reforms needed to seize trade war opportunity

The ongoing trade dispute between the United States (US) and China could benefit manufacturing hotspots in Southeast Asia, such as the Philippines, provided the government implements sweeping reforms to align trade and investment policies with industrial strategies.

- BY DEXTER BARRO II

In a virtual forum hosted by the Philippine Manufacturing Team, former Department of Trade and Industry (DTI) Undersecretary Rafaelita Aldaba said she is expecting manufacturing firms in China to redirect their exports toward alternative markets.

This is a direct consequence of the 145-percent tariffs US President Donald Trump slapped on Chinese goods last month as part of both countries' trade war.

Aldaba, now an emeritus researcher at the Philippine Institute for Development Studies (PIDS), said Southeast Asia will primarily benefit from the export shift due to its proximity to China.

While she noted that this can benefit manufacturers and consumers through cheaper inputs and products, it raises concerns of market saturation that could potentially damage local industries.

However, as Chinese firms are looking to find a new venue for their exports, the massive tariffs imposed by the US would create a strong incentive to relocate their manufacturing facilities to lower-risk countries.

Aldaba said the Philippines would be a good candidate for these expansion prospects since it has one of the lowest reciprocal tariffs from the US, at 17 percent.