The 20 percent tariff recently announced by the United States on Philippine exports to the US will have limited impact on overall economic growth as the Philippine economy is less reliant on exports, an economist said.
Rizal Commercial Banking Corporation chief economist Michael Ricafort said in a recent Viber message “the Philippine economy is relatively resilient and largely [a] consumer-driven local economy that is still among the fastest-growing in Asia, being less dependent on merchandise exports compared to major ASEAN economies.”
“The local economy is more domestically driven, wherein consumer spending accounts for about 75% of the local economy,” Ricafort said.
In a letter dated July 9 addressed to President Ferdinand R. Marcos Jr., US President Donald Trump said that beginning Aug. 1, 2025, the US will raise tariffs on Philippine goods to 20%, higher than the 17% previously announced.
Ricafort said that while this is expected to slow down exports, there will be a “limited drag on Philippine GDP (gross domestic product), since Philippine exports are not that huge compared to other Asian countries.”
“Philippine merchandise exports are 3-5 times lower compared to major ASEAN countries on a yearly basis. Philippine exports are not that huge compared to other Asian countries, so more limited adverse impact on the Philippines by the U.S. reciprocal tariffs. [The impact will be] more bearable compared to the higher US reciprocal tariffs on other Asian countries,” he added.
The 20% reciprocal tariff that will be imposed to the Philippines is significantly lower than the 25 percent tariff that will be imposed on Japan, South Korea, and Malaysia, 30 percent on China, 32 percent on Indonesia, 36 percent on Thailand and Cambodia, and 40 percent on Laos and Myanmar, and 50% on Brazil. (With PNA)