THE PHILIPPINES, a domestic demand-driven economy, has the potential to avoid the worst of the new US tariff regime relative to its neighbors, Moody’s Ratings said.
“No economy in Asia and the Pacific (APAC) will be immune but those that are primarily domestically driven — such as India, Indonesia and the Philippines — will cope better,” it said in a report.
US President Donald J. Trump is planning to impose reciprocal tariffs on countries that tax US imports early next month.
Since taking office in January, Mr. Trump has imposed a 20% levy on all Chinese imports and a 25% tariff on all steel and aluminum imports.
“Intensification of geopolitical pressures could further harm the APAC region, as fragmentation policies are likely to reduce activity — and thus lower demand for exports,” Moody’s said.
The credit rater also said the Philippines is unlikely to be a primary target of tariffs.
“Indonesia and the Philippines, with smaller surpluses and growing defense ties with the US, are likely to face fewer tariffs,” it added.
The US is the top destination for Philippine-made goods. In 2024, exports to the US were valued at $12.12 billion or 16.6% of total export sales.
On the other hand, the value of Philippine imports from the US was $8.17 billion or 6.4% of total imports.
However, Moody’s warned of the indirect impact of the tariff war on the overall region.
“Growing dependence on China suggests the indirect impact of tariffs on ASEAN could be significant,” it said.
“The decline in export demand poses risks for economies striving to emulate China’s export-led growth model, as competing in an increasingly interventionist trade environment becomes difficult.”
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. has expressed concern about the indirect spillovers coming from the US trade policies.
“The potential end of the de minimis exemption could significantly reduce demand for small-parcel goods from China, creating challenges for Chinese e-commerce platforms with high US exposure,” Moody’s said.
“Additionally, redirecting exports away from the US may create competitive pressures for manufacturers in other regions, posing further barriers for China’s export sector.”
Moody’s also said heightened global policy uncertainty could “negatively impact business confidence, leading to reduced investment in the region.”
“Even if bystander economies such as ASEAN gain export share, they may still be worse off because of a smaller global economy,” it added.
The BSP reported that foreign direct investment net inflows declined 85.2% to $110 million in December, its lowest level in 11 years. — Luisa Maria Jacinta C. Jocson