PHL export prospects riding on tariff ruling by US Supreme Court

By Justine Irish D. Tabile, Reporter

A US Supreme Court ruling on the reciprocal tariffs will shape the Philippines’ trade prospects as the justices grapple with President Donald J. Trump’s radical overhaul of the trading system, analysts said.

Associate Professor of the University of Asia and the Pacific George N. Manzano said via Viber: “Because the US is our biggest export market, our prospects will depend on the ruling of the US Supreme Court on the authority of President Trump to impose reciprocal tariffs.”

The Philippine Statistics Authority (PSA) reported that exports to the US totaled $11.158 billion in the first ten months, or about 15.8% of total exports.

In the first 10 months, Philippine exports amounted to $70.43 billion, up 13.8% from a year earlier.

“The export increase looks consistent with peso depreciation, which makes Philippine exports more competitive internationally, and an increase in world demand for semiconductors, which is a significant chunk of Philippine exports,” he said.

Also, among the reasons for the rising semiconductor exports, he said, is the industry’s tariff-exempt status.

In the first 10 months, the Philippines exported $37.7 billion worth of electronic products, up 12.6% from a year earlier.

Of the electronic product exports, $28.27 billion consisted of semiconductors, up 11.6% year on year.

Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said the industry’s export performance in the first ten months means the group’s growth projections remain on track.

“Most probably,” he said via Viber. “There are no changes in our top markets: Hong Kong, the US, and China.”

Last week, Mr. Lachica said SEIPI is expecting 5-7% growth in exports this year.

If realized, this will bring the total electronic product exports to at least $41 billion by year-end from $39.09 billion a year ago.

Moving forward, Mr. Manzano said that Mr. Trump’s executive order exempting some agricultural exports will help boost Philippine agricultural exports.

“The US remains the top export market despite the reciprocal tariffs for the Philippines because a sizable share of Philippine exports (semiconductors and electronics) are still exempt from reciprocal tariffs,” he said.

He said other factors include the gestation period to develop and diversify to other markets and the still-being-negotiated Philippines-European Union Free Trade Agreement.

Meanwhile, he said that the decline in imports in October reflected softer economic growth overall.

“Philippine imports, on the other hand, decreased, which may be consistent with soft gross domestic product growth leading to weaker import demand, particularly of capital goods, energy, and raw materials,” he said.

The PSA reported that imports declined 6.5% in October to $11.22 billion.

In the first 10 months, imports amounted to $111.75 billion, up 4.3%.

“The slower imports could still reflect lower global commodity prices. Being among the lowest in three to five years partly led to a lower import bill,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said via Viber.

“The weaker peso also made imports into the Philippines more expensive, thereby dragging on demand,” he added.

However, he said that the weak peso “provided some boost for Philippine exports cheaper from the point of view of international buyers.”

Meanwhile, he said that as export markets diversify away from the US in response to the reciprocal tariffs, imports could eventually pick up.

“There may be some export-dependent countries that could diversify their exports and sell more to the Philippines, which could lead to import growth going forward,” he said.

“But the US tariff exemption on many agricultural exports would be a bright spot for overall Philippine exports, since these have yet to catch up compared to higher agricultural export amounts of other Association of Southeast Asian Nations (ASEAN) countries,” he added.