Trump tariffs will hurt PH GDP growth by 0.1% in two years – NEDA

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rapplerAds.displayAd( "mobile-middle-1" );MANILA, Philippines – If the US pushes through with its 17% reciprocal tariffs on Philippine exports to the US, it will hurt the Philippines’ economic growth by 0.1% in the next two years.



Special Assistant to the President for Investment and Economic Affairs Frederick Go, in a press briefing in Malacañang on Thursday, April 10 said the government acknowledges that while the Philippines was slapped second to the lowest tariffs next to Singapore’s 10%, it will nonetheless mean higher prices of Philippine exports to the US which could hurt the economy. Trump has hit pause on the reciprocal tariffs, except with China. Must Read Trump U-turns on tariffs but keeps trade war heat on China “We are aware that any tariff, any additional tariffs, still affects certain industries in the Philippines which is why we think that may konting effect po ito.

Based on the NEDA ([National Economic and Development Authority) estimates, posibleng may effect po ito ng 0.1% sa ating GDP in the next two years. So, kaunti lang po iyong effect,” he said.

(We are aware that any tariff, any additional tariffs, still affects certain industries in the Philippines which is what we think that it will have a little effect. Based on NEDA estimates, the possible effect will be 0.1% on our GDP for the next two years.

So, it’s just a minor effect.)The Philippine economy grew by 5.6% in 2024, short of the government’s target 6% to 6.

5%. In 2023, GDP grew by 5.5%, while the target was 6% to 7%.

Former agriculture secretary Leonardo Montemayor earlier warned that the higher US tariffs, despite being relatively lower compared to most countries, might still prompt US consumers to forego Philippine products, which is bad news for the Philippines. In his weekly column in the Philippine Daily Inquirer on Thursday, NEDA Secretary Arsenio Balisacan explained the minimal impact on the country. “Current estimates indicate that in the absence of retaliation, the impact of the reciprocal tariffs on the Philippine economy is likely small, averaging less than 1% of the country’s gross domestic product (GDP),” he said.

“This limited impact is attributable to the Philippines’ relatively small export volume to the US, which accounts for only 2.6% of GDP, compared to Vietnam’s 25%, Thailand’s 10%, and Malaysia’s 10%. Additionally, production capacity constraints further limit this impact.

”Since Philippine exports face lower tariffs compared to other countries, Balisacan said the Philippines “could become a more attractive source for US imports.” However, he said this potential “trade diversion” would happen only if the Philippines had the “production capacity to meet increased demand.” window.

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displayAd( "mobile-middle-2" );Balisacan said the responses of other countries to the higher US tariffs should be monitored since these would affect the Philippines’ position.“If others are able to negotiate more favorable tariff rates than the 17% applied to the Philippines, any trade diversion advantage may evaporate. The broader impact on the Philippine economy remains uncertain, as global tariff shifts will affect demand for its exports across all trading partners,” Balisacan said.

US-Philipines Free Trade AgreementIn the Palace briefing, Go said the economic team met with President Ferdinand Marcos Jr. on Tuesday, April 8, and assessed the impact of the higher US tariffs on various industries. Go said Philippine businesses are “generally quite resilent,” and the loss of one market simply means exporters would have to look for other markets.

He said the government would meet with Philippine exporters and discuss the possible measures they can take and how government can assist them. He also said the government was also monitoring what its neighbors are doing in response to the higher US tariffs. Go said the Philippine government has reached out to the US Trade Representaitve (USTR) for a dialogue on what it believes is the best policy — a free trade agreement (FTA) between the two countries.

“I think the key words are probably not appeal, this is a negotiation and of course in my opinion, the best possible outcome is a free trade agreement — free trade agreement means zero tariffs on their side, zero tariffs on our side — that’s probably the best possible outcome of that meeting but again it’s open communication, dialogue, cooperation and let’s see what we can negotiate,” Go said. Must Read Philippines advised to seek sectoral trade agreement under Trump 2.0 He said the USTR responded positively, and that he will be scheduling a trip to the United States to meet with the USTR soon.

The Philippines and the US have been discussing an FTA deal for several years now. window.rapplerAds.

displayAd( "middle-3" );window.rapplerAds.displayAd( "mobile-middle-3" );Balisacan, in his column, also stressed the need for small economies to get together and negotiate as a group vis-a-vis the US.

“For small economies with limited influence in the global marketplace, the most effective response to tariff shocks is often not retaliation, but coordinated negotiation. By joining forces with similarly positioned countries, they can amplify their collective voice and improve their chances of being heard. Divided, they may carry little weight in the strategic calculations of an economic superpower,” he said.

Meantime, Reuters, reporting on the Association of Southeast Asian Nations (ASEAN) economic ministers meeting in Kuala Lumpur on Thursday, said Southeast Asian countries are pressing for dialogue with the US and will not impose retaliatory measures. Before a 90-day pause was announced by Trump, six of nine Southeast Asian countries targeted by the US administration were slapped with much bigger-than-expected tariffs of between 32% and 49%.By comparison, the level for the European Union was 20%, Japan’s was 24% and India’s 27%.

“We express our common intention to engage in a frank and constructive dialogue with the US to address trade-related concerns. Open communication and collaboration will be crucial to ensuring a balanced and sustainable relationship,” the ASEAN economic ministers said in a statement. The ministers said they reaffirmed their support for a predictable, fair, and rules-based multilateral trading system.

The 10-member ASEAN is collectively the world’s fifth-biggest economy. Its members are heavily reliant on exports as a driver of growth. – with a report from Reuters/Rappler.

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