The country’s leading business chamber, which mostly consists of small and medium enterprises (SMEs), is bracing for extra costs due to the Trump administration’s imposition of a 17-percent tariff on Philippine imports.
In a statement, the Philippine Chamber of Commerce and Industry (PCCI) said SMEs are particularly wary of the potential impact of retaliatory tariffs other countries may take in response to the United States’ (US) sweeping tariffs.
Last week, US President Donald Trump announced a 10-percent baseline tariff on all imports, along with a higher reciprocal tariff on countries with which America has a trade deficit.
This unprecedented move, framed by Trump as a boon to American manufacturing, is feared to incite a devastating trade war.
Trade giant China recently announced a 34-percent tariff on US goods as its response to Trump’s 34-percent tariff on Chinese goods.
Trump has since threatened to slap China with an extra 50-percent tariff if it fails to scrap its counter-tariff, further rattling stock markets across the globe.
Canada, the 27-member European Union (EU), and other countries are preparing their respective retaliation.
PCCI stressed that this potential trade war can disrupt global supply chains, increase costs, and create uncertainty for businesses and consumers.
It said this will bring in a “broad negative effect” on the country’s economic growth.
“More so for a remittance and consumer-driven economy like ours,” the group said.
PCCI said the ripple effect of having to absorb extra costs will hit small businesses the hardest—particularly those in agriculture and food processing, which make up most of its membership.
So far, the chamber said it is still awaiting the exact coverage of America’s tariff on Philippine goods.
It, however, noted that such tariffs typically target specific categories of goods, such as food and agricultural products, which are among the country’s major exports.
Based on the White House’s “fact sheets” published on its website last week, goods not subject to the tariffs include copper, pharmaceuticals, semiconductors, and lumber articles, as well as energy and other minerals not available in the US, among others.
Based on data from the US Office of the Trade Representative (USTR), American goods trade with the Philippines was $23.5 billion in 2024, with a trade deficit of $4.9 billion.
This relatively minimal deficit is the reason why the Philippines has among the lowest tariffs in the Association of Southeast Asian Nations (ASEAN).
“This ensures that our competitiveness is preserved or improved unless adjustments are made in future,” said PCCI.
Meanwhile, those with higher deficits were hit with higher tariffs, such as Vietnam (46 percent), Thailand (36 percent), Indonesia (32 percent), and Malaysia (24 percent). These countries are considered close competitors of the Philippines in terms of trading with the US.
“We note, too, that our neighbors are already preparing to negotiate with the US to offer lower tariffs and better concession arrangements,” PCCI said.
“We await our government’s action and watch our neighbors then act accordingly,” it added.
Malaysian Prime Minister Anwar Ibrahim, whose country is this year’s ASEAN rotating chair, earlier called on member states to take a united stance against Trump’s punitive tariffs.