THE PHILIPPINES is among the least exposed to US tariff policies in Southeast Asia and stands to benefit from shifting trade directions, the Philippine Institute for Development Studies (PIDS) said in a discussion paper.
“For smaller economies like the Philippines, the new tariff regime presents both a strategic opportunity and a formidable challenge,” according to the paper authored by PIDS Emeritus Research Fellow Rafaelita M. Aldaba.
“The relatively lower tariff rate creates openings for niche export expansion, particularly in sectors with tight price margins and high tariff sensitivity such as garments and footwear.”
US President Donald J. Trump slapped the Philippines with a 17% tariff, the lowest among Association of Southeast Asian Nations-5 (ASEAN-5) countries. Vietnam faced the highest tariff rate at 46%, followed by Thailand (36%), Indonesia (32%) and Malaysia (24%).
However, Ms. Aldaba, a former undersecretary at the Department of Trade and Industry, said that capitalizing on the window of opportunity is “far from automatic.”
“The Philippines’ ability to convert this relative advantage into tangible economic gains will hinge on how swiftly it can mobilize responses in logistics, investment facilitation, and targeted export promotion.”
PIDS used a tariff exposure composite index (TECI) to measure the “relative vulnerability of the country’s exports to the new tariff regime.”
Under the TECI index, the Philippines and Indonesia logged the same score of 2.2, which indicates a moderate risk.
Vietnam registered the highest exposure (3.4), followed by Thailand (3.0). Malaysia scored a 2.8, which indicates a moderate exposure.
Data from PIDS also showed that based on the relative exposure of ASEAN-5 economies to the US market, the Philippines has the smallest export footprint. Its share of exports is just 5% of the region’s total.
However, it also noted that the Philippines’ exports to the United States accounts for about 20% of its total exports.
The country’s top exports are electronics, particularly related to semiconductors, as well as coconut oil and printing machines.
“Its limited product diversification and small volume make it more vulnerable to sector-specific shocks but also signals potential for targeted upgrading,” Ms. Aldaba said.
Ms. Aldaba said the Philippines benefits from the lowest reciprocal tariff among ASEAN-5 due to the structure of its exports.
“Electronics — including semiconductors — account for over 50% of the country’s total exports, and many of these products are included in the US exemption list. This strongly cushions the Philippines from broader tariff disruptions, helping to temper its actual trade vulnerability,” she added.
However, she said the country is still not completely unaffected by these tariffs and faces some form of exposure.
“Non-exempted exports — such as coconut oil, insulated wires, containers, and select low-tech manufacturing goods — are more vulnerable to cost increases and competition, especially from trade diversion out of China or higher-tariff ASEAN partners.”
“Despite this, the Philippines is strategically positioned to benefit. Its unique combination of low tariff rate, strong exemption for high-value exports, and moderate strategic exposure creates an advantageous platform for trade redirection, particularly for thin-margin, cost-sensitive goods.”
To maximize these benefits, PIDS said the country must “bolster its industrial base, improve logistics and Customs efficiency, and actively promote itself as a stable and efficient export hub amid shifting global supply chains.”
The Philippines is also “well-positioned to capture relocation and supply-chain shifts,” particularly in electronics goods.
“However, to realize this opportunity, the Philippines — and similar ASEAN peers — must address structural gaps,” Ms. Aldaba said.
These include ramping up infrastructure development to address gaps and alignment of the labor market to upskill workers to meet the needs of complex manufacturing.
“To overcome these barriers and unlock its full export potential, the Philippines must urgently implement a coordinated set of strategic trade and industrial interventions to safeguard critical sectors while acceler-ating industrial upgrading,” she added.
Ms. Aldaba also called for the need for industrial upgrading and resilience building, and trade defense and monitoring mechanisms.
“Without swift and proactive policy implementation, the Philippines risks being merely a passive beneficiary rather than a strategic player in ongoing global trade realignments,” she said.
“Conversely, by adopting targeted policy and institutional measures — grounded in digital readiness, sectoral upgrading, and strategic positioning — the Philippines can establish itself as a credible alternative hub for digital-ly-enhanced, service-integrated, and geopolitically trusted exports.” — Luisa Maria Jacinta C. Jocson
