Industry group says exports may hit only USD 105B as US orders slow

Some exporters have seen slower orders from the United States after the 19% “reciprocal” tariff took effect last month, which could cause outbound shipments this year to be lower than previously expected, the Philippine Exporters Confederation, Inc. (Philexport) said.

Philexport President Sergio R. Ortiz-Luis, Jr. said export sales may only reach between USD 105 billion and USD 110 billion for this year amid the slowdown in orders from the US.

This is below the USD 115.49-billion export target under the updated Philippine Development Plan (PDP) and significantly lower than the USD 163.6-billion projection under the Philippine Export Development Plan (PEDP).

“Humina talaga ang orders. Noong April nag-canvass kami (Orders have really slowed down. When we asked them in April), 90% of the exporters to the US that we canvassed said that it is business as usual,” he told reporters on the sidelines of the group’s general membership meeting on Thursday. “The other 10% said that they are having problems with their buyers because they are very cautious. Noong lumabas [’yong tariffs] noong August, lalo nang nawala ’yong buyers sa US (This worsened when the tariffs were implemented in August).”

“The PEDP is unworkable already, so we are just adopting the PDP because it is more attainable. But with [US President Donald J.] Trump coming in, we might also not reach it. Our target now is USD 110 billion. So, I hope our exports will be between USD 105 billion and USD 110 billion,” Mr. Ortiz-Luis added.

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the Philexport’s year-end forecast is a more realistic range.

“While electronics remain a bright spot, external headwinds — such as slower US demand and tariff risks — pose challenges,” he said in a Viber message.

“Our trade outlook sees the deficit narrowing gradually, but export diversification and value-added growth will be key to sustaining momentum.”

The Philippines’ trade deficit narrowed to USD 28.46 billion in the first seven months from the USD 29.93-billion gap a year ago.

The country’s trade balance has been in deficit for over a decade or since the USD 64.95-million surplus recorded in May 2015.

In the January-to-July period, exports increased by 13.9% to USD 48.62 billion, while imports rose by 6.1% to USD 77.09 billion.

The Development Budget Coordination Committee projects a 2% contraction and 3.5% growth in exports and imports, respectively, this year.

Mr. Ortiz-Luis said frontloading was the main driver of the country’s merchandise exports for the first seven months of the year.

“That is when we still had a tariff advantage… But when the new rate came out, everybody’s tariff went down except us and Brunei,” he said.

“Our competitiveness disappeared immediately… Unless something positive comes, our exports to the US will slow down.”

Amid lingering uncertainty in the global trade environment, exporters need to look for alternative markets, which Philippine companies cannot do “as we don’t have funds, postings, and research and development,” he said.

“So far, [the government’s support for] exports has only been lip service.”

Most exporters, especially smaller companies, cannot promote overseas through trade fairs because they lack funding, Mr. Ortiz-Luis said.

The outlook for semiconductor exports also remains uncertain as Mr. Trump has threatened to impose a 100% tariff on chips entering the US, he added.

“The tariff for electronics, until now, we don’t know. Because if the US puts all of it at 100% and then South Korea, Japan, and Taiwan have special rates, our electronics will be dead, and they will have no choice but to leave.”

“In the meantime, we do not know. We are still uncertain about it. Everybody is just interpreting what Trump is saying,” he said, adding they still expect the country’s chip exports to grow by 1-2% this year.

In the first seven months, the country’s electronic exports reached USD 25.61 billion, up 7.2% from USD 23.88 billion in the same period last year. — Justine Irish D. Tabile, Reporter