Amid new US tariffs Cebu exporters stay competitive

CEBU, Philippines — The United States’ recent imposition of reciprocal tariffs averaging 17 percent on foreign goods — including those from the Philippines — marks a significant shift in global trade dynamics. Despite this development, Cebu exporters remain confident in their ability to stay competitive.

Fred Escalona, executive director of PhilExport-Cebu, noted that while the 17 percent tariff may appear steep at first glance, it is still significantly lower than the average 34 percent tariff the Philippines currently imposes on American products. The move is part of Washington’s broader push to bolster domestic manufacturing, particularly affecting aluminum and steel imports — key materials in Cebu’s globally recognized furniture industry.

Philippine aluminum and steel components will now face a 25 percent duty when entering the US market. Escalona emphasized that these tariffs are not unique to Philippine exports.

 “All foreign exporters, without exception, are being subjected to similar or even higher rates,” he said. Major trading partners such as China, Mexico, and Canada are also contending with heightened duties.

This, Escalona pointed out, puts Philippine exporters — including Cebu’s robust manufacturing sector — on a level playing field globally. The larger question, he added, is whether these tariffs will ultimately dampen American demand for imported goods.

“If consumer appetite holds firm, the ultimate burden may fall on US consumers, who will have to absorb the increased costs of foreign products,” he explained. However, if higher prices curb demand, exporters around the world could feel the effects.

For Cebu’s exporters, especially those in the furniture and allied industries, the takeaway is clear: while the cost of doing business has risen, the new US tariff regime ensures that no single competitor gains an unfair advantage.

“In a rapidly shifting global trade environment, maintaining quality, innovation, and strategic market engagement will be crucial for sustained growth,” Escalona said.

“In the end, while the tariffs introduce new challenges, they also reinforce a principle Cebu exporters have long embraced: compete on merit, not on exemptions,” he added.

Meanwhile, business leaders in Cebu are monitoring the potential impact of the tariff hike on Philippine exports to the United States.

In a statement, the Cebu Chamber of Commerce and Industry (CCCI) called the development a “wake-up call” for exporters and policymakers alike.

“Any increase in tariffs will hurt the sales volume and competitiveness of specific products,” the chamber warned.

The United States remains the Philippines’ largest export market, with goods valued at US$12.1 billion in 2024 — representing 16.6 percent of total Philippine export revenues.

Electronics account for 53 percent of those exports, underscoring the Philippines’ vital role in supplying semiconductors, telecommunications equipment, and other components to the US.

Despite concerns, the CCCI sees a potential silver lining. At 17 percent, the Philippine tariff rate remains one of the lowest in the ASEAN region — second only to Singapore’s 10 percent — offering the country a rare competitive advantage.

“This could serve as an incentive for Foreign Direct Investments (FDIs), particularly in production facilities here in Cebu,” the CCCI said.