A Hong Kong-based garments company is looking to expand its manufacturing capacity in the Philippines to take advantage of the country’s relatively low tariff rates once the postponed reciprocal tariffs are lifted after 90 days.
Department of Trade and Industry (DTI) Secretary Cristina Roque disclosed this to reporters in a recent interview when asked about the advantages of the 17-percent tariff imposed on the country’s imports into the United States (US).
“I’m already going to meet with the garments manufacturer in Hong Kong before the end of the month because they’re already thinking of strengthening and adding more production in the Philippines because of the 17 percent,” said Roque.
While she did not identify the company, the DTI Secretary said it’s “one of the biggest, if not the biggest,” with production already present in the country.
“So gusto talaga nilang mag-explore na (So they really want to start exploring now)…they’re planning to grow it already here in the Philippines,” she added.
Early this month, US President Donald Trump announced two sets of tariffs—a baseline 10-percent tariff on all imports into America, and additional reciprocal tariffs on various countries based on trade deficits.
With its 17 percent, the Philippines faced one of the lowest reciprocal tariffs in the Association of Southeast Asian Nations (ASEAN).
According to the list provided by the White House, Cambodia was the hardest-hit country in the 10-member bloc, as it was slapped with a 49-percent tariff.
The Philippines’ close trade competitors with the US also saw higher tariffs, such as Vietnam (46 percent), Thailand (36 percent), Indonesia (32 percent), and Malaysia (24 percent).
The Trump administration later moved to postpone the reciprocal tariffs for 90 days, only keeping the initial 10-percent tariffs.
The DTI chief said the Hong Kong-based company is keen on leveraging the country’s 17-percent rate to boost its manufacturing capacity.
“They’re thinking that it will stay at 17 percent, but it’s hard to say, hard tayo mag-speculate. Ang best talaga is really to just wait (it’s hard for us to speculate. The best thing really is to just wait),” explained Roque.
She stressed that if the US decides to retain the initial reciprocal tariffs, it would position the Philippines as a favorable destination for investments.
However, given Trump’s apparent determination to pursue a tariff war against China, the opportunity may already be presenting itself.
In a report, think tank Capital Economics said the tariffs imposed by the US on Chinese imports, currently at 145 percent, could drive production away from China and towards emerging economies.
“Those emerging markets that have spare capacity in sectors that overlap with what China produces for the US market are likely to raise output,” it said.
To recall, during the first trade war between the US and China under Trump’s first administration, Vietnam was seen as a major beneficiary for companies seeking to avoid tariffs.
Vietnam now faces uncertainty—particularly in its manufacturing sector—if the US maintains its imposition of a 46-percent tariff rate, one of the highest in the region.
Special Assistant to the President for Investment and Economic Affairs (SAPIEA) Secretary Frederick Go earlier said that the 17-percent tariff could be a boon for local manufacturing.
“From my perspective, I think this opens up a lot of opportunities for companies that are based in the countries with higher tariffs to look seriously at investing in the Philippines,” he said.