The Philippines is bracing for the potential economic shifts accompanying the return of Donald Trump to the presidency. Officials from the Department of Trade and Industry (DTI) are optimistic about the prospects, stating the nation is unlikely to see the same tariff hikes proposed for other countries due to its strong trade ties with the United States.
During the National Exporters’ Week, DTI Undersecretary Ceferino Rodolfo expressed confidence, emphasising the relatively low trade deficit the Philippines maintains with the U.S., amounting to just $4 billion. This deficit is negligible compared to those of other Asian nations, including China, which faced a staggering $300 billion deficit. Rodolfo noted this positions the Philippines favorably as the U.S. moves to adjust its trade policies.
He explained, "Countries with significant trade imbalances, particularly those whose deficits have worsened, are likely to face more scrutiny and potential tariff increases." Since the Philippines has strived for balanced trade with the U.S., its standing could protect it from impending tariff hikes. The DTI is committed to working closely with U.S. officials, including Senator Marco Rubio, Trump's incoming Secretary of State, who has been instrumental in fostering closer economic ties.
Rodolfo also highlighted Rubio's legislation, the Philippines-US Strategic Partnership Act, which aims to facilitate negotiations over key issues such as minerals and fossil fuel projects within the Philippines, thereby ensuring mutual economic benefits. The anticipation of these developments has created an air of optimism within local trade circles.
Contrastingly, there are cautious voices urging assessment of Trump's trade policies, particularly concerning tariffs on U.S. imports. National Economic and Development Authority Secretary Arsenio Balisacan noted, "The return of Trump can introduce uncertainty, especially if high tariffs are implemented universally, which could stifle growth not only for the U.S. but globally.” This suggests While trade relations could strengthen, the approach to tariffs is still unclear and could create challenges as well.
Meanwhile, as the tariff discussion heats up, the economic outlook for the Philippines has begun to reflect adjustments due to this uncertainty. The economic team under President Ferdinand Marcos Jr. has widened the projected growth range for 2025, now forecasting between 6% and 8%, adjusted from the previous outlook of 6.5% to 7.5%. Analysts aim to factor these potential swings, alongside other global economic pressures, including the Philippines’ standing as one of the worst-performing currencies in Asia over recent months.
The local peso is projected to average between 57 and 57.50 to the dollar, signalling currency instability amid Trump's promises of significant tariff levies. Business sentiment appears resilient, with discussions around consumption growth absorbing potential impacts from political developments, as reiterated by Finance Secretary Ralph Recto. He pledged greater consumption and public investment will sustain economic momentum, irrespective of challenges.
Overall, the Philippines stands at the crossroads, optimistic yet cautious, as it prepares for the impending Trump's presidency and the ripple effects of trade policy shifts. The expectation remains rooted in the necessity for agile adaptation to evolve with changing trade dynamics, ensuring the nation continues to find its foothold amid global uncertainties.
