PCCI: Trump tariff reduction from 20% to 19% welcome, but not 'game-changer'

The Philippine Chamber of Commerce and Industry (PCCI), the largest business organization in the country, welcomed the negotiated reduction in tariff rate for Philippine goods entering the US following the meeting between US President Donald Trump and President Ferdinand Marcos”Bongbong” Marcos Jr.

The business group, however, said the reduction will not be a game-changer for the country’s exports sector.

Early morning on Wednesday (Philippine time), Trump announced a new 19% tariff rate for Philippine goods entering America. This is lower than the 20% announced in a letter earlier this month, but higher than the 17% rate announced last April on what the US president referred to as Liberation Day.

"Every percentage point counts," said PCCI president Enunina Mangio.

“While a 1% reduction is modest, it translates directly to lower costs of Philippine products in the US market versus those of other countries that are facing higher tariffs; provides exporters a bit more flexibility in pricing negotiations; and, particularly for micro, small, and medium enterprises (MSMEs), can translate to meaningful cost savings, stronger profit margins, and improved price competitiveness,” added Mangio.

The PCCI chief, however, said that while the tariff reduction would be helpful, “it is not a game-changer.”

“Realistically speaking, a 1% reduction is unlikely to trigger a massive surge in exports. The impact will be most felt by specific industries already exporting the affected goods,” said Mangio.

She noted that broader factors like overall economic demand, global competition, logistics costs, production challenges (infrastructure, input costs, bureaucratic efficiency), and non-tariff barriers (NTBs) “often have a far greater impact on export volumes than a single percentage point tariff change.”

With this, the PCCI chief urged the government to continue efforts to negotiate deeper and more comprehensive tariff relief across a wider range of product lines, as well as to address NTBs. 

She also called on the government to aggressively implement domestic reforms to improve doing business and trade, lower logistics and energy costs, promote digital infrastructure and provide international trade incentives to strengthen competitiveness, improve productivity and build a resilient and inclusive economy.

"We hope this is just the start," Mangio said, adding that “the government to negotiate for more product coverage for reduced tariffs; tackle regulatory hurdles such as sanitary and phytosanitary (SPS) measures and standards recognition, which can be more significant obstacles than tariffs themselves; revisit discussions on a more comprehensive bilateral trade agreement or deeper integration under existing frameworks like the Indo-Pacific Economic Framework (IPEF); and, negotiate for the expansion of trade preference programs like the GSP (Generalized System of Preferences).”

The US chief executive initially said the Philippines is going "open market" with the United States with zero tariffs, while the Philippines would pay a 19% tariff.

Marcos, however, has since clarified that the zero tariffs on US products would only apply to certain markets such as automobiles.

The President also committed to increase imports of soy, wheat, and pharmaceuticals from the US.

Special Assistant to the President for Investment and Economic Affairs of the Philippines Frederick Go also clarified that agricultural products, which are considered "sensitive" commodities for the Philippines' agri-fisheries sector, are not included in the zero tariff scheme for American exports entering the Philippines. — RSJ, GMA Integrated News