Economy faces headwinds from China tariffs

MANILA, Philippines — The intensifying trade war between the US and China could worsen the economic headwinds already being faced by the Philippines, according to Department of Finance (DOF).

In a text message, Finance Secretary Carlos Dominguez said the recent threat of President Trump to slap more tariffs on China may pose more threats to the Philippine economy.

“Definitely this action will tend to increase the economic headwinds we are already facing,” Dominguez said.

According to the finance chief, the Duterte cabinet’s Economic Development Cluster (EDC) will discuss this development in its next meeting.

In his tweet, President Trump said the US will impose starting Sept. 1 an additional 10 percent tariff on $300 billion worth of goods and products coming from China. This is on top of the $250 billion worth of goods whose tariff was already raised to 25 percent earlier.

Trump said China did not fulfill its promise to buy agricultural products from the US.

Earlier, Dominguez said some local industries may be hurt by trade tensions between the US and China.

“We’re going to be affected by that because a lot of our exports to China are parts of, let’s say, telephones and computers, which are assembled in China and then reexported to the US,” Dominguez had said.

Nevertheless, the finance chief expressed hope that the impact would not be significant given that the Philippines is not a huge exporting country.

The Philippines saw a weaker GDP growth in the first quarter of 2019 at 5.6 percent, which was mainly attributed to the drop in government spending, brought about by the delay in the 2019 budget.

However, economic managers see growth rebounding starting the second quarter, especially with the enactment of the 2019 General Appropriations Act last April.

For 2020, economic growth is expected to accelerate to a range of 6.5 to 7.5 percent, according to the Development Budget Coordination Committee (DBCC).