The Philippine Chamber of Commerce and Industry (PCCI) said the minimal cut in tariffs imposed by the United States (US) on the Philippines should prompt the government to address other trade barriers, ensuring the resiliency of local industries amid headwinds.

The PCCI said the US’ move to reduce the tariffs it threatened against Philippine goods from 20 percent to 19 percent is a positive step for the government’s ongoing negotiations for a bilateral trade deal.

"While a one percent reduction is modest, it translates directly to lower costs of Philippine products in the US market versus those of other countries that are facing higher tariffs,” said PCCI President Enunina Mangio in a statement.

Mangio said the revised tariff rate would provide exporters more flexibility in pricing negotiations with their counterparts in the US.

She also said that micro, small, and medium enterprises (MSMEs) would benefit from substantial cost savings, stronger profit margins, and improved price competitiveness.

With that in mind, Mangio stressed that the reduction of one percentage point (ppt) to the tariffs is simply not a “game-changer.”

"Realistically speaking, a 1% reduction is unlikely to trigger a massive surge in exports,” the official said.

“The impact will be most felt by specific industries already exporting the affected goods," she added.

Based on data from the Office of the US Trade Representative (USTR), America’s total goods trade with the Philippines reached $23.5 billion last year.

The trade deficit, which the US’ tariff policy aims to address, stood at $4.9 billion.

The US was the Philippines' top exporting partner in 2024, with an export value of $12.14 billion, accounting for 16.6 percent of the country’s total exports, according to government data.

Given the small impact of the reduced tariffs on the country’s exports, Mangio said the government should instead focus on trade factors that have greater impact on export volumes.

She said there should be more focus on addressing issues related to overall economic demand, global competition, logistics costs, production challenges, and non-tariff barriers.

She noted that non-tariff barriers, in particular, should be the top concern alongside efforts to negotiate a more significant tariff relief for more Philippine goods.

In its annual report on foreign trade barriers, the USTR flagged issues such as corruption, lack of transparency, counterfeiting, piracy and other regulatory hurdles as barriers to trade with the Philippines.

The PCCI president said the government should be more aggressive in implementing domestic reforms to improve to ensure that domestic industries and the overall economy are resilient.

She has recommended a more robust improvement in doing business and trade in the country, reduction of logistics and energy costs, promotion of digital infrastructure, and and introduction of additional international trade incentives to strengthen competitiveness.

While details of the trade agreement with the US are yet to be finalized, Mangio said the government’s top negotiators should revisit existing trade mechanisms with the world’s top economy.

The Philippines should seek a deeper integration in economic initiatives such as the Indo-Pacific Economic Framework (IPEF), as well as the expansion of trade preference programs like the generalized system of preferences, she said.