Philippine exporters are warning that the US decision to impose an additional 12.5 percent tariff on most Philippine exports could weaken the country’s competitiveness in its largest export market, putting pressure on manufacturers and micro, small, and medium enterprises (MSMEs) already navigating a volatile global trade environment.
The Philippine Exporters Confederation Inc. (PHILEXPORT) said the new duty under the US Section 301 investigation could make Philippine goods less price competitive, even as exporters continue to absorb higher logistics costs, geopolitical disruptions, and slowing global demand.
“The Philippines has long been a responsible trading partner of the United States and remains firmly committed to internationally recognized labor standards,” PHILEXPORT President Sergio R. Ortiz-Luis Jr. said.
While supporting international efforts to eliminate forced labor from global supply chains, PHILEXPORT said blanket tariffs risk penalizing exporters that already comply with internationally recognized labor and sustainability standards.
The additional duty is expected to weigh most heavily on labor-intensive industries, including furniture, garments, processed food, coconut products, handicrafts, marine products, electronics, and other value-added manufactures, as US buyers could shift orders to lower-cost suppliers or demand price concessions.
The concern extends beyond the tariff itself.
Federation of Philippine Industries Chairman Elizabeth H. Lee noted that Philippine exports now face a 2.5 percentage-point disadvantage against competitors from Indonesia and Malaysia, which were placed under the lower 10 percent tariff rate.
That gap, she said, could influence sourcing decisions in highly competitive industries where even small differences in landed costs can determine where orders are placed.
Still, Lee said the Philippines has an opportunity to narrow the gap.
Because the tariff is linked to compliance with forced labor regulations, she said the country could still qualify for the lower 10 percent rate or obtain product-specific exemptions if it demonstrates that its regulatory framework effectively addresses US concerns.
“The burden is now on rapid regulatory alignment,” Lee said.
PHILEXPORT urged the government to intensify diplomatic engagement with Washington while accelerating the implementation of stronger labor compliance measures and expanding access to new export markets.
For Philippine exporters, the latest US tariff decision highlights a new reality in global trade. Competitiveness is increasingly shaped not only by cost and quality, but also by compliance with evolving labor and sustainability standards.
