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The Philippines is more likely to achieve upper middle-income status by 2027, a year later than the government’s target, given the current growth prospects, the World Bank said.

“The more likely scenario is that it will take a couple of years. It won’t be 2026. It’s more likely that it may be 2027,” World Bank Group Lead Economist and Program Leader for the Prosperity Unit for Brunei, Malaysia and the Philippines Gonzalo Varela told reporters on the sidelines of an event on Monday.

“The reasonable scenario is we expect a couple of years. It would take the Philippines a couple of years to pass that upper middle-income threshold.”

The Marcos administration is targeting to achieve upper middle-income status by 2026.

Based on the latest data from the World Bank, the Philippines is currently classified as a lower middle-income country as its gross national income (GNI) per capita was USD 4,230 in 2023. However, this was higher than its GNI per capita of USD 3,950 in 2022.

According to the World Bank’s classification, an economy is considered lower middle-income if the GNI per capita level is between USD 1,146 and USD 4,515, while upper middle-income countries are those that have a GNI per capita of USD 4,516 to USD 14,005. The World Bank typically releases its income classification data every July.

For his part, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said the country is still on track to meet its target of reaching the higher income class by next year.

“Barring major external shocks, and assuming a favorable global trade environment, we are well-positioned to achieve upper middle-income status by 2026,” he said in a speech during the event.

“Nonetheless, we remain acutely aware of the uncertainties that confront the global economy — ranging from systemic risks in economic institutions and technological disruption to environmental challenges.”

However, Mr. Varela said the Philippines would only be able to graduate to the upper middle-income level next year if it is able to deliver an “outstanding growth performance.”

“With our forecast that is just out, it will not be 2026. Does that mean that it cannot be 2026?  No, it can if you deliver much faster growth… we believe that it’s more likely for it to be 2027,” he added.

The World Bank slashed gross domestic product (GDP) growth forecasts for the Philippines this year and next year amid uncertainty and the looming global slowdown. Philippine GDP is now expected to expand by 5.3% this year and by 5.4% in 2026, well below the government’s 6-8% target for both years.

Mr. Varela said the Philippines needs to ensure sustained growth of per capita income.

“Given the rates of growth that we have been seeing and given the conditions of the domestic economy and the global economy, under reasonable scenarios, we think that in the next couple of years, this is feasible for the Philippines to achieve,” he added.

The Philippines will also need to implement key reforms to hurdle its current income class and sustain the growth needed to remain in the upper middle-income level.

Mr. Varela cited the amended Public Service Act, which allows full foreign ownership in key public services like telecommunications, airlines and railways.

“On paper, it has been passed. But there are a number of actions that need to be taken so that its full implementation happens. That is something that is going to create a lot of opportunities for investment and for productivity growth.”

He also noted reforms that will simplify regulations to make it easier for foreign players to enter the country.

“For a foreign firm, it takes 106 days for a foreign firm to be registered in the Philippines. That is substantially more than what we see in the rest of the world.  In Singapore, it takes about 10 to 15 days,” Mr. Varela added.

He noted these reforms will help the Philippine economy growing “past the threshold.”

Impact of US Tariffs

Meanwhile, Mr. Varela also cited the impact of the tariff policies on the country’s growth outlook.

“The Philippines is a small open economy. As a small open economy, what happens in the rest of the world matters for the Philippines,” he said.

“An increase in global uncertainty is going to be detrimental for the Philippines’ growth prospects. It will likely affect exports, and it will affect investment. Investment is heavily affected by policy uncertainty.”

The United States slapped a 17% reciprocal tariff on the Philippines in early April but paused this policy for 90 days. However, the baseline 10% tariff remains in effect.

As global uncertainty weighs on investment, Mr. Varela said doubling down on domestic reforms will help support growth.

“That’s why I was mentioning streamlining regulations, so that you reduce the costs of foreign and domestic investment in the Philippines. It’s something that is going to help offset that.”

These reforms should also make logistics cheaper, which is crucial for the Philippines, being an archipelagic country.

“Reforms that open up the domestic trade, domestic transport sectors. These are reforms that are going to help the economy keep growing, even with global uncertainty increasing,” he added.

Once the country transitions to the next income level, Mr. Varela said there will be many opportunities it can capitalize on.

“For example, after graduation, (though) not immediately, after three consecutive years of keeping that level of income above the threshold of upper middle-income, there are some developed countries that reduce concessions on trade,” he said.

The Philippines being a beneficiary of the EU Generalized Scheme of Preferences Plus (GSP+) could also be affected after it graduates.

“This is why the government of the Philippines has been working with the European Union in negotiating a free trade agreement,” Mr. Varela said.

“That way, the idea there is that while you lose GSP+, you can move into an agreement in which you have an FTA.”

Meanwhile, DEPDev Undersecretary Joseph J. Capuno noted that the transition to an upper middle-income level will entail a “shift in access to resources.”

“As countries move up the income ladder, eligibility for concessional financing and access to traditional official development assistance begin to diminish,” he said at the same event.

“With this, new priorities arise — necessitating stronger domestic institutions, heightened international cooperation, more sophisticated mechanisms for managing debt and raising revenue, provision of innovative solutions, and a renewed focus on effective financing for development.”

Mr. Capuno said there is a need to adopt new frameworks for sustainable development and establish more and stronger partnerships.

“Improving coordination among development partners can better harmonize support to the country. This means working together to design strategies that support transitions of middle-income countries (MIC) to a higher income threshold.”

The government will implement reforms in its Medium-Term Fiscal Framework 2022-2028 as it prepares to transition to an upper middle-income economy, Mr. Capuno said.

This will “rebuild fiscal space and improve credit ratings, emphasizing the government’s commitment to fiscal consolidation and debt sustainability.”

“We also underscore the importance of technical and financial assistance that international organizations and financial institutions can extend to MICs to assist in the formulation of sound revenue and tax policies and strengthen capacity for tax collection and revenue generation,” he said.

Country partnership

Meanwhile, the World Bank is currently in the process of preparing its new country partnership framework for the Philippines.

“The Philippines remains a very important country for the World Bank. Our partnership with the Philippines is extremely important… that partnership is going to turn 80 this year,” Mr. Varela said.

The framework, which will cover 2025 to 2031, is set to be finalized and released by the end of June.

“We are thinking of around three main outcomes that have to do with improving quality and access to human capital. That has an element related to education, but also an element related to nutrition and health,” Mr. Varela said.

Meanwhile, the second outcome is related to job creation in the private sector, while a third outcome involves resilient communities.

“We are expecting the Philippines to become an upper middle-income economy within the time frame of that framework,” Mr. Varela added. – Luisa Maria Jacinta C. Jocson, Senior Reporter

The  Philippines expects to close a favorable deal with the United States, the presidential palace said on Monday, as key officials travel to Washington on April 29 to negotiate the 17% reciprocal tariff imposed by President Donald J. Trump as part of a global trade war that puts economic growth, jobs and wages at risk.

Trade Secretary Ma. Cristina A. Roque on Monday said the Philippine delegation will aim to bring down the US tariff rate on Philippine goods to zero.

“Of course, we’ll aim for zero tariff. But it depends on what they tell us. Because in every negotiation, there’s always the other side, right?… It’s either we get it in one go or like other countries, [go through] negotiations,” she told reporters.

Presidential Communications Office Undersecretary Clarissa “Claire” A. Castro said Special Assistant to the President for Investment and Economic Affairs Frederick D. Go had instructed them to wait for the dialogue’s outcome.

“His instructions were to just wait and see what the outcome of the talks and negotiations would be,” she said in Filipino during a news briefing at Malacañang.

She did not elaborate on the country’s negotiation strategy or the level to which they hope to bring down the 17% tariff rate.

“Let’s just see what’s good for the Philippines and for our relationship with the US,” she said.

Ms. Roque and Mr. Go will be in Washington from April 29 to May 2 for tariff talks with the US Trade Representative.

Ms. Roque said the Trade department’s strategy is to offer enhanced market access to key US exports to the Philippines such as automobiles, dairy products, frozen meat, and soybeans.

“In any negotiation, we cannot just take and take… But when we get into a negotiation, we’ll always try to protect what’s here. It’s useless to negotiate if we kill (our own industries),” she said.

However, Ms. Roque said they will prioritize local industries despite their openness to improve market access for US goods.

“When we go there, we first have to protect the interests of the people here… Because it has to be win-win for all. We cannot have a scenario where one sector wins over the others,” she added in mixed English and Filipino.

The US imposed a 17% tariff on the Philippines, although this has been suspended until July. It was the second lowest in Southeast Asia, after Singapore.

“Of course, we expect that in one go we can already get what we want because we’re starting at a low percentage, not like other countries. And we also have good relations with the US, so we’re hoping that it would not be a problem for them to lower the tariff,” she said.

Asked if the Philippines should wait for the outcome of other countries’ negotiations, Ms. Roque said the Philippine delegation is ready for the meeting.

“Let’s wait until we get there. This is a negotiation. They also need the market. Remember, the Philippines is big, and we have a good relationship with the US. And then just by looking at our tariff, which is already low, it says a lot of things also,” she added.

Sought for comment, Josue Raphael J. Cortez, a diplomacy lecturer at De La Salle-College of St. Benilde, the Philippines may leverage its chairmanship of the Association of Southeast Asian Nations (ASEAN) in 2026 during the trade talks.

He said the US may maximize this opportunity to gain further solid ground within the regional market vis-à-vis China.

“With the US as the region’s largest source of foreign direct investment, we can further expand our regional partnership — the Trade and Investment Facilitation Agreement,” he said in a Facebook Messenger chat.

The Trade and Investment Framework Agreement, signed in 2006, aims to further partnership between the US and ASEAN, collectively the world’s fifth-largest economy.

Mr. Cortez said the Philippine delegation may successfully negotiate to lower the 17% tariffs if the US feels it can also gain more flexibility in trade.

“For the negotiation, we can include lower tariffs for US imports from us, such as semiconductors. At the same time, we could also leverage our service providers, like business process outsourcing (BPOs), who comprise an integral part of both the country’s and the US’ service sectors,” he said.

A US-Philippines free trade agreement is “undoubtedly the most viable way,” he added.

However, IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa called the Philippine government’s offer to further lower tariffs on US goods a capitulation rather than a negotiation.

“It is a surrender of economic sovereignty, dressed up as diplomacy to continue an imagined strong relationship with the US,” he said in a Viber message.

While the US is raising tariffs to protect its economy, Mr. Africa said the Marcos administration is weakening the Philippine economy by continuing to believe in “free trade.”

He warned that further tariff cuts will hurt local farmers and manufacturers and called for a more independent, domestically driven development strategy.

The Philippines should also prioritize protecting its domestic industries and pursue national industrialization, like the US is doing, according to Mr. Africa.

Federation of Free Workers President Jose Sonny G. Matula said the Philippines is gradually building strengths in key policy areas that align with US interests.

In terms of intellectual property, the labor leader noted that the Philippines upgraded its enforcement under the Intellectual Property Office of the Philippines (IPOPHL) and signed several treaties. – Justine Irish D. Tabile and Chloe Mari A. Hufana, Reporters

The Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) is hoping to see at least a modest growth in exports this year as more investments are expected to come in amid improved incentives and lower US tariffs.

“We have contracted for two years in a row. Now we have projected flat growth, but we are optimistic that we might see some modest growth,” SEIPI President Danilo C. Lachica told reporters on the sidelines of an event on Friday.

“It could be a single-digit growth, maybe 1-2% growth, just not flat,” he added.

Electronic products were the top commodity export of the Philippines last year, accounting for 53.4% of its total exports.

In 2024, the Philippines exported USD 39.1 billion of electronic products, down 6.7% from USD 41.91 billion a year prior.

Mr. Lachica said that the sector is quite optimistic this year as there is growing interest from foreign firms to locate in the Philippines due to the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act.

“There was a lot of interest because CREATE MORE is a big upgrade… but the first thing to overcome is if the country we will go to knows about the Philippines, so we have to advertise our country,” he said.

“And then the second thing is… we need to show improvements in our operating costs, whether that is power or logistics.”

However, he said even if investments are much higher, it will not translate to an increase in manufacturing exports immediately.

“But the good thing is, you’re fueling the growth engine with these investments, which will eventually generate employment and generate the supply chain. So, we’re looking forward to that,” he added.

At the same time, Mr. Lachica said that the 17% tariff rate to be imposed by the US could encourage some companies in other countries with higher tariffs to look at the Philippines for expansion.

Philippine exports to the US face a 17% tariff, the second lowest among Association of Southeast Asian Nations (ASEAN) member countries after Singapore’s baseline rate of 10%. The higher tariff has been suspended until July.

“While we’re enjoying that sweet spot, what’s concerning is the intrinsic value of our exports. We’re in the back-end assembly test and packaging. That’s why my hope is to see a commercial wafer fab,” he said.

SEIPI previously proposed to the government the establishment of a lab-scale wafer fab, which is estimated to cost around USD 10 million.

“A lot of people still believe that we do not need a wafer fab… Our proposal is a tabletop wafer lab [because] we are trying to grow our integrated circuit design industry,” he said.

“We need a government agency to help us out, someone who understands. And then, it’s going to be a combination of government funding and bank funding,” he added.

According to Mr. Lachica, SEIPI will be sending a proposal to the Department of Science and Technology as early as the end of May.

While the 17% tariff is lower compared with those imposed on other ASEAN members, Mr. Lachica said the Philippines should still negotiate a lower rate.

“We want to work on reducing it further. Because… we don’t know if it’s going to remain at 17%. When all is said and done after negotiations, maybe later other countries will even out,” he said. “That’s why we cannot leave anything on the table. We have to take this opportunity sooner rather than later to negotiate.”

Trade Secretary Ma. Cristina A. Roque and Special Assistant to the President for Investment and Economic Affairs Frederick D. Go will be in Washington from April 29 to May 2 for tariff talks with their US counterparts.

Mr. Lachica said the Philippines will have to tread carefully as the electronic sector imports 30% of its raw materials from China.

“If China is slapped with an exorbitantly high tariff, then their form of retaliation might be holding back on materials that they export. For example, the rare earth and rare metals, already one of our members cannot get their supply of magnets,” he said.

“So, if this escalates, the 30% we import from China might be severely impacted,” he added.

If it happens, he said that the Philippines will have to develop other sources.

Aboitiz InfraCapital Head of Economic Estates Rafael Fernandez de Mesa said that the tariffs will bring uncertainty and volatility, which could be “good for the Philippines.”

“Why do I think it’s good? Because as a business, you are trying to manage that risk and that volatility, and in an industrial sector where it’s really a global landscape, you need to have your risk diversified, and that’s where the Philippines comes into play,” he told a panel discussion.

“In a world of uncertainty and volatility, I think there’s going to be more movement towards the Philippines. That’s what we’re starting to see over the month and a half: renewed and more accelerated interest,” he added. – Justine Irish D. Tabile, Reporter

Monetary board (MB)  approvals for public-sector foreign borrowing more than doubled in the first quarter, the central bank said.

Data from the Bangko Sentral ng Pilipinas (BSP) showed approved public-sector foreign borrowing soared to USD 6.29 billion in the first quarter from USD 2.87 billion in the same period a year ago.

Broken down, the approvals consisted of bond issuances worth USD 3.33 billion, five project loans (USD 1.46 billion) and three program loans (USD 1.5 billion).

“The approved foreign borrowings have medium- to long-term maturities,” the BSP said.

It said the proceeds of the bond issuances will be used to “fund various budget requirements of the National Government (NG), including socioeconomic programs and projects, as well as settlement of maturing financial obligations.”

“The program loans are meant to fund projects on economic development and finance initiatives, while the project loans will fund initiatives in the areas of transportation and infrastructure,” it added.

Under the Constitution, the Monetary Board is required to approve any foreign loan agreements entered by the NG.

The BSP must also approve in principle any foreign borrowing proposals by the National Government, government agencies and government financial institutions before actual negotiations.

The Monetary Board must submit a report of its decision on these applications for loans within thirty days from the end of every quarter of the calendar year.

The central bank said this is in line with its task of “ensuring that the country’s foreign debt remains manageable.”

Latest data from the BSP showed the Philippines’ outstanding external debt rose by 9.8% to USD 137.63 billion as of end-December 2024 from USD 125.39 billion a year ago.

This brought the external debt-to-gross domestic product (GDP) ratio to 29.8% at the end of 2024, higher than the 28.7% at end-2023.

The NG’s gross borrowings rose by 4.92% to PHP 213.14 billion in January from PHP 203.15 billion a year prior, latest Treasury data showed.

Of this, gross external debt dipped by 1.14% year on year to PHP 60.94 billion in January. This consisted of program loans (PHP 56.29 billion) and project loans (PHP 4.65 billion).

This year, the government’s financing program is set at PHP 2.545 trillion, where 20% will be sourced from foreign sources. The Finance department is seeking to gradually adjust the borrowing mix to rely less on external borrowings to mitigate foreign currency risk. — Luisa Maria Jacinta C. Jocson

Trade Secretary Cristina A. Roque on Friday said that the Philippines is considering to import more agricultural products from the US as it seeks to negotiate a lower tariff rate next week.

Ms. Roque and Special Assistant to the President for Investment and Economic Affairs Frederick D. Go will be in Washington from April 29 to May 2 for tariff talks with their US counterparts.

“The goal of the meeting is to get what is best for the country, which is, of course, to bring down the tariffs and to really just reiterate that we will continue our strong relationship with the US,” Ms. Roque told reporters on the sidelines of the Franchise Asia Philippines 2025 International Conference and Expo on Friday.

To achieve this, she said that the Philippines is looking at increasing the volume of imports from the US, particularly farm products.

“So, what we are importing from them, we will try to import more. Let’s say soybeans and frozen meat, so agricultural products … but we need to balance everything also with our agricultural sector,” she added.

Asked if a free trade agreement (FTA) is still on the table, she said that “we will still have to see if we can really get an FTA … but we will put all of the possibilities on the table.”

Ms. Roque said that the Philippine economic team is set to hold a meeting before the trip to consolidate inputs from different industries to know what the country will be willing to put on the negotiating table.

“We want to get a consensus also, so when we decide, it’s not based on what we think, but based on the consultations with the different industries,” she said.

“Because we want that whatever we negotiate, it will be for the best of the industry of the Philippines.”

Asked at what level they hope the 17% tariff rate will be brought down, Ms. Roque said that will be among the things that will be finalized in the economic team’s meeting prior the trip.

“But definitely they (the stakeholders) want lower tariffs than those of the neighboring countries’ because once our tariff is lower, then that gives us an edge in terms of business with the US,” she said.

Earlier this month, US President Donald J. Trump introduced 10% blanket tariffs on all its trading partners but paused a plan to impose higher reciprocal tariffs on some countries for 90 days.

Philippine exports to the US face a 17% tariff, the second lowest among Association of Southeast Asian Nations member countries after Singapore’s baseline rate of 10%. — Justine Irish D. Tabile

Budget Secretary Amenah F. Pangandaman anticipates a rebound in infrastructure spending in the next two months, following an expected dip in April due to the election ban.

In an e-mail interview with BusinessWorld, Ms. Pangandaman said disbursements “tend to pick up strongly” in May and June. 

“With regard to the election ban, based on historical government spending performance for similar national and local election periods, for example, in 2019 or in 2022 (presidential election), we see a bit of a temporary slowdown when the election ban is in effect in April,” she said on April 15.

The Commission on Elections’ ban on public works spending began on March 28 and will run for 45 days. The midterm elections are scheduled for May 12.

Latest data from the Department of Budget and Management (DBM) showed spending on infrastructure and other capital outlays declined by 19.8% to PHP 146.7 billion in December 2024 from P183 billion in the same month in 2023.

For the full year, expenditures on infrastructure and other capital outlays jumped by 10.1% to PHP 1.33 trillion from PHP 1.2 trillion in 2023.

Infrastructure spending data for the first three months of 2025 is yet to be released.

Ms. Pangandaman, who chairs the Development Budget Coordination Committee, said there would be “a slowdown in project execution during the first half of 2025 on account of the upcoming midterm national and local elections.”

A similar slowdown in infrastructure spending was seen in the months leading up to the May 2022 national polls.

In 2022, infrastructure and other capital expenditures fell by 9.7% in April, but inched up 2.1% in May and jumped by 51.9% in June.

Despite the expected slowdown, Ms. Pangandaman remains optimistic that infrastructure disbursements will be “robust” in 2025.

“We are optimistic that infrastructure spending will remain robust and a significant growth driver for the year, particularly from the ongoing projects which were started and accelerated ahead of the election ban,” she said.

Ms. Pangandaman noted that in the first two months of 2025, state spending already showed a 13.76% increase to P822 billion.

“When we look at other data, for instance, using bank reports for the same period to check specific agency spending performance, the disbursements of at least the Department of Public Works and Highways and the Department of Transportation — the two main infrastructure departments — combined for PHP 83.9 billion, more than 50% of their equivalent disbursements for the comparable period in 2024 of P54.5 billion,” she said.

Ms. Pangandaman said this only factored the notices of cash allocation (NCA) disbursements and left out the non-NCA items.

The NCA is a cash authority issued by the DBM to central, regional and provincial offices and operating units through government banks to cover the cash requirements of the agencies.

“These numbers somehow indicate the relative strength of infrastructure spending that we expect for the year,” Ms. Pangandaman said.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc. said there may be an increase in infrastructure spending in 2025. 

“Apart from the election season, lower borrowing costs and fiscal spending to boost economic growth may also drive higher infra spending. I expect to see the increase in infra spending in the second half of the year,” Mr. Erece told BusinessWorld on Thursday. 

In addition, Mr. Erece expects public-private partnerships projects to “prosper” amid lower borrowing cost and fiscal spending.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said infrastructure spending has become a major contributor to economic growth and development.

He noted that infrastructure spending’s share in gross domestic product has gone up to 5-6% in recent years, sharply higher than the less than 2% share in the last 20-30 years. – Aubrey Rose A. Inosante, Reporter

The Philippine government said that it is confident that it will be able to secure a “mutually advantageous” arrangement with the US ahead of trade talks with US counterparts next month.

“We are confident that, through our strong economic and diplomatic ties, we can find arrangements that are mutually advantageous,” said Special Assistant to the President for Investment and Economic Affairs of the Philippines Frederick D. Go in a statement on Wednesday.

Mr. Go issued the statement following the consultations his office conducted with the Department of Trade and Industry (DTI) and key export leaders.

Mr. Go will lead a delegation to Washington to discuss the tariffs on Philippine goods with the US Trade Representative.

Presidential Communications Undersecretary and Palace Press Officer Claire A. Castro on Monday said that the meeting will take place in the first week of May.

Earlier this month, US President Donald J. Trump introduced 10% blanket tariffs on all its trading partners but paused a plan to impose higher reciprocal tariffs on some countries for 90 days.

Philippine exports to the US face a 17% tariff, the second lowest among Association of Southeast Asian Nations member countries after Singapore’s baseline rate of 10%.

According to the DTI, the consultations with export leaders were meant to “gather insights and formulate strategic measures to strengthen bilateral trade with the US amidst the recently imposed US reciprocal tariffs.”

The DTI said the exporters gave their insights on the current market dynamics in the US.

“They elucidated the strategic opportunities and challenges that the current situation presents… The discussions focused on how the government and the private sector can work together in highlighting the Philippines as a reliable and trusted trading partner amidst uncertainties in international trade,” it added.

The DTI expressed confidence that the Philippine government can work with the US in identifying opportunities that will benefit their respective economies.

“The consultative process has enhanced mutual understanding and alignment on shared goals,” Trade Secretary Ma. Cristina A. Roque said.

According to the Trade chief, the consultations “aim to ensure that views and interests of various sectors are taken into consideration as the government works to secure the best possible outcomes for the Philippines in our trade relations with the US.”

In a previous statement, Ms. Roque said that the Philippines aims to engage the US to facilitate enhanced market access for Washington’s key export interests, such as automobiles, dairy products, frozen meat, and soybeans.

Problems at the ports

Meanwhile, United Portusers Confederation of the Philippines, Inc. President Nelson M. Mendoza said that the US tariffs are a pressing concern for the shipping industry.

“Right now, even the exporters are not in a better position because a lot of their orders, although they were not canceled, were on hold,” Mr. Mendoza told reporters on Wednesday.

“Those orders are being held because of the tariff. Now, because of the 90-day pause, those will probably be initially moved. But after 90 days, we do not know what will happen,” he added.

Mr. Mendoza said the export orders for 2025 were placed in 2024 when rates and costs were lower.

At the same time, he said that the imports will also be affected, as goods coming from the US will be more expensive.

“As the shipping lines said, the route of their vessels will be irregular for probably a moment. For me, I can say for four years at least, as Trump will be there for four years,” he said.

“We are just hoping that the negotiations between the US and other countries will pave the way to at least neutralize it (the situation) a bit,” he added.

However, Mr. Mendoza said that the new tariff measure could also present opportunities, such as Chinese companies increasing their production in the Philippines.

“They might export from the Philippines with a lesser tariff compared to China. They may not necessarily relocate here, but they might increase their production,” he said.

“But the important thing is that we improve our ease of doing business so a lot of them will transfer to us. Because right now we are not competitive in terms of putting up business compared to other Asian countries,” he added.  – Justine Irish D. Tabile, Reporter