The Philippines is prioritising a free trade agreement (FTA) with the United States after Washington imposed a 17% tariff on Philippine goods.
The tariff, part of a new reciprocal duties framework announced by President Donald Trump on April 2, directly impacts Philippine exports worth over $12 billion in 2024.
Manila hopes the new tariff regime will serve as an opening to negotiate improved market access and protect its largest trading relationship.
Trade Secretary Cristina Aldeguer-Roque confirmed plans to meet US Commerce Secretary Howard Lutnick to pursue the FTA.
Philippine officials said the agreement would cover key exports including electronics, dairy, frozen meat, soybeans, and automobiles.
The government has also signalled its readiness to offer better terms for American imports under a “mutually beneficial” deal.
US tariffs take effect April 9
The 17% tariff on Philippine goods is part of a broader US policy applying reciprocal tariffs based on each country’s own rates.
According to US data, the Philippines charges an average of 34% duty on US imports.
In response, the White House imposed a 17% levy on Filipino products, effective April 9.
The rate compares favourably with the 46% tariff placed on Vietnam and 32% on Indonesia.
Other Southeast Asian nations such as Cambodia and Thailand face 49% and 37% tariffs, respectively.
Philippine officials have described the 17% rate as less severe than expected, highlighting that some products are exempt.
These include copper ores, integrated circuits, pharmaceuticals, and gold.
Exporters brace for higher costs
Despite the exemptions, the new tariffs still threaten a wide range of Philippine exports.
Electronics make up 53% of all shipments to the US, and though some components like integrated circuits remain duty-free, others will face added costs.
The United States accounted for 17% of the Philippines’ exports in 2024, with semiconductors, wiring sets, coconut oil, machinery, and garments among the top categories.
Agricultural exports are particularly exposed. Products like canned pineapple, coconut oil, and seafood will now be subject to the full 17% tariff, potentially reducing demand.
Industry groups have warned that US buyers may shift to alternative suppliers if prices rise, affecting rural livelihoods back home.
Finance Secretary Ralph Recto pointed out that lower tariffs compared to other Southeast Asian countries could attract investors to the Philippines.
He noted that the country’s relatively smaller tariff burden could encourage companies looking to access the US market to move operations to the Philippines.
Investment and trade realignment
Officials are promoting the Philippines as a competitive base for foreign manufacturing.
With countries like Vietnam and China facing higher US tariffs, the government sees a chance to draw in new investment.
Manufacturers of electronics, automotive parts, and solar panels are already showing interest.
The Department of Trade and Industry believes the tariff environment supports the case for a US-Philippines FTA.
It argues that formalising trade terms would give exporters long-term protection from abrupt policy changes, especially for sensitive sectors like agriculture and garments.
The government is also encouraging exporters to increase shipments of tariff-exempt products while negotiations continue.
By leveraging its lower rate compared to neighbours, the Philippines hopes to maintain its presence in the US market and position itself as a preferred supplier.
While the US administration has yet to respond to the FTA proposal, Philippine officials say they are committed to engaging in dialogue and presenting a strong case.
They aim to strengthen bilateral ties and safeguard the country’s export performance under a changing global trade landscape.
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