Economists weigh in on Trump's 20% tariff

The Philippines may be "less affected" by US President Donald Trump's decision to slap a 20 percent tariff on all Philippine exports, although uncertainty surrounding the policy is likely to weigh on investor sentiment and delay growth-related decisions.

- By KEISHA TA-ASAN, LOUISE MAUREEN SIMEON, LOUELLA DESIDERIO and MARCO LUIS BEECH

"There's so much unpredictability," Rizal Commercial Banking Corp. president and CEO Reginaldo Cariaso said in an interview.

"It's unprecedented how tariffs are being used as a tool by the Trump administration. We'll have to see how this evolves after Aug. 1, but I do think the Philippines will be less impacted than other countries," Cariaso said.

Starting Aug. 1, the US will impose a 20-percent general tariff on all Philippine exports to the US. This was higher than the 17 percent reciprocal tariffs previously announced last April.

While Cariaso admitted that the situation remains fluid, he noted that the country's relatively low exposure to high-tariff categories might serve as a buffer against the worst effects of a protectionist policy shift in the US.

On the downside, local exporters that sell to the US market could see demand shrink as their products become more expensive due to higher tariffs. This could force companies to pivot to alternative markets such as Canada, Europe or South America, depending on their strategy.

"Some companies may find other markets to redirect to, but it really depends on whether they have the capacity and supply chains in place to do that," Cariaso said.

He pointed to a possible upside: if other countries such as Vietnam face higher tariffs, the Philippines could become more attractive as a manufacturing base, especially for industries where the country already has existing capacity, such as electronics or textiles.

The tariff for the Philippines is lower than neighboring Southeast Asian nations such as Indonesia at 32 percent, Thailand and Cambodia at 36 percent and Laos and Myanmar at 40 percent.

"There could be a net benefit for the Philippines," he said. "But for more complex manufacturing like semiconductors or autos, we're not quite there yet." Cariaso added that the broader uncertainty might lead businesses to postpone expansion plans.