PHL third-hardest hit in Southeast Asia by US tariff shocks — UNDP

The Philippines is projected to be the third-most affected economy in Southeast Asia by US tariffs, as its exports to the US are expected to contract by 13%, a United Nations Development Programme (UNDP) report showed.

In its report “Disruption, Diversification, and Divergence” released on Sept. 18, the UNDP said the Philippine exports to the US could potentially drop by 13.1%, due to the newly imposed tariffs.

“The imposition of steep US tariffs is projected to trigger a significant demand-side shock, particularly for Asia-Pacific economies with high trade exposure,” it said.

“The Asia-Pacific region as a whole faces a 6.4% decline in total exports to the US due to tariff-induced price increases, with Southeast Asia hit the hardest at 9.7%,” it added.

In Southeast Asia, Cambodia is the most vulnerable to the US tariffs, with an expected 23.9% drop in total exports to the US.

Vietnam is the second-most affected by tariffs, with a likely 19.2% decline in total exports.

Other Southeast Asian economies are also expected to see a decline in exports to the US, with Thailand’s exports likely to fall by 12.7%, followed by Malaysia (10.4%), Indonesia (6.4%), and Singapore (3.8%).

These estimates are based on US tariff rates as of July 31.

In an executive order signed on July 31, US President Donald J. Trump imposed a 19% duty on many goods from five members of the Association of Southeast Asian Nations (ASEAN) — the Philippines, Cambodia, Malaysia, Thailand and Indonesia. These rates took effect on Aug. 7.

The US is the Philippines’ top export destination, receiving $12.14 billion in shipments last year.

The UNDP said that small, highly trade-dependent economies that focus on lower-value products are the most exposed to tariff shocks.

“Their reliance on narrow export baskets and limited markets leaves them without meaningful buffers against external volatility. In such settings, tariff increases are transmitted directly into export losses, foreign exchange constraints, and employment pressures, with limited scope for policy mitigation given constrained fiscal space and less flexible labor markets,” it said.

Meanwhile, larger economies that concentrate on higher-value products are more likely to absorb the impact of tariff shocks, UNDP said.

According to the UNDP, the Philippines had one of the highest shares of exempted goods relative to its total exports to the US at 27%.

This was behind Malaysia (39%) and Vietnam (28%), but ahead of Thailand (26%), and China (24%).

US TARIFF RULING

Meanwhile, the Philippine government is still waiting for the final decision of the US Supreme Court on the legality of Mr. Trump’s global tariffs.

“We still have to wait for the final decision of the Supreme Court on this,” Special Assistant to the President for Investment and Economic Affairs Undersecretary Ma. Angela E. Ignacio said during the Philippine Economic Briefing in Clark.

Reuters reported the US Supreme Court has scheduled arguments that will hear the legality of the Trump tariffs on Nov. 5.

The High Court is taking up the case after a lower court ruled that Mr. Trump had overstepped his authority in imposing most of his tariffs under the 1977 law known as the International Emergency Economic Powers Act. The tariffs are still in effect during the appeal to the SC.

Ms. Ignacio said the Philippine government is still looking to secure an “optimal and mutually beneficial agreement” with the US, which has previously expressed interest in securing tariff exemptions for selected US imports and a free-trade agreement.

Ms. Ignacio also said the country is looking at alternative export markets such as the European Union, the Middle East and Australia. — ARAI