Reciprocal tariffs could put PH ‘in the line of fire’

THE Philippines could end up “more directly in the line of fire” as US President Donald Trump prepares to impose new reciprocal tariffs and sector-specific duties next week, Maybank Research said in a new report.

The impending measures, particularly the reciprocal tariffs that will be tailored to individual trading partners, “will change the relative rankings in terms of vulnerability” for the Association of Southeast Asian Nations (Asean), the research unit of the Maybank Investment Banking Group said last Friday.

Trump, who triggered a global trade war in February by first targeting China, Canada and Mexico — the US' biggest trading partners, has said that the reciprocal tariffs and a 25-percent duty on all semiconductor, pharmaceutical and auto imports would be announced on April 2.

“We had hoped that Asean might stay under the radar and be spared from US tariffs, at least during Trump's first year in office,” Maybank Research said, adding that initially, Vietnam was considered the most at-risk economy in the region due to its significant trade surplus with the US, which reached $123 billion in 2024.

However, the introduction of reciprocal tariffs — to be based on taxes imposed on US goods, “unfair” taxes, the cost to US businesses and consumers from another country's policies, exchange rates, and any other practices deemed unfair — could see more Asean countries in the US' crosshairs.

“Reciprocal tariffs could place Indonesia, Philippines and Thailand more directly in the line of fire,” Maybank Research said.

Using a formula of “import tariffs on US goods + value added tax (VAT),” Indonesia and the Philippines “would be more vulnerable” as their 16.2-percent and 15.3-percent results, respectively, are far higher than the 4.1 percent and 1.4 percent imposed by the US.

The 15.3 percent for the Philippines combines an applied tariff rate of 3.3 percent on US goods and a 12.0-percent VAT.

Maybank also noted that 85 percent of the Philippines' imports were subject to non-tariff measures, indicating possible retaliation.

As for trade surpluses, it pointed out that Vietnam, Indonesia, Malaysia and Thailand had been listed by the Office of the US Trade Representative (USTR) as among the economies with the largest merchandise trade deficits with America.

The Philippines, while not mentioned by the USTR, also runs a trade surplus — at $4.9 billion as of 2022 — with the US.

With regard to sector-specific tariffs, Maybank Research said that US duties on semiconductors could dampen a recovery in Asean electronics exports.

Malaysia, Vietnam and Singapore were said to have the highest exposure to the US, and the Philippines was also noted to be a major hub of chip assembly and testing, with semiconductor exports to the US accounting for 10.8 percent and 4.0 percent, respectively, of the region's chip and overall exports.

Despite the looming trade war, some developments could benefit the region, Maybank Research said.

“Two recent policy shifts may help cushion the impact on Asean,” it noted.

“Recent US tariff hikes have raised the effective duties on China to a hefty 32 percent, by our estimates, opening up a sizable gap between tariffs on China and Asean, which will support the move in supply chains and increase FDI (foreign direct investments) to Asean,” Maybank Research said.

“China's retaliatory tariffs on US agricultural imports could boost Chinese demand for key Asean products, including seafood and poultry,” it added.

Maybank Research noted that during Trump's first term, during which the US and China engaged in tit-for-tat tariff exchanges, some Asean agricultural commodities particularly benefited, with some recording lasting gains in terms of market share in China.

Seafood exports from Vietnam, Indonesia and Thailand remain elevated, while Thailand has also seen the same with regard to its poultry exports. Vietnam also saw a surge in poultry exports during Trump's first term, but the gain has since fizzled out.