US tariffs to dampen PHL electronics export growth

THE SEMICONDUCTOR and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) expects the 20% US tariff to dampen its optimistic projections this year.

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SEIPI President Danilo C. Lachica said the group initially projected a flat growth to about $42.6 billion this year.

“But we have seen some upticks and that caused some optimism. In fact, personally, I thought we might hit the 2023 levels of $46 billion,” he said in an interview on Money Talks with Cathy Yang on One News.

“But, you know, these tariff developments have been disappointing, and that might temper our optimistic projections,” he added.

Despite the challenges, Mr. Lachica said he still expects a modest increase compared to the earlier export projection of $42.6 billion.

“Well, I’m an optimist, so I hope we'll see some modest increase in that, but that remains to be seen. We'll just pray for it and hope for successful negotiations,” he added.

Last week, US President Donald J. Trump imposed a 20% tariff on Philippine-made goods entering the US starting Aug. 1, higher than the 17% previously announced.

The new rate is the same as the rate on Vietnam, which secured a deal with the US.

Mr. Lachica said that the 20% rate is “disappointing” considering that the reciprocal tariffs were placed to minimize the US trade deficit.

"If you look at the trade deficit of the Philippines, which is about $6 to $8 billion, it is much, much less than Vietnam's trade surplus," he said.

"We're probably 20 times less, and so it was really a surprising development to see that we've been bumped up to 20% and Vietnam lowered to 20%. So that creates major concerns," he added.

Mr. Lachica said the previously announced 17% tariff gave the Philippines a competitive advantage over Vietnam which had a 46% tariff.

"And now we're at the same level. And Vietnam is one of our biggest competitors, if you will, in terms of attracting foreign direct investments and even exports," he said.

Despite the uncertainty, Mr. Lachica said some optimism remains for electronics and semiconductors' export growth.