IN our editorial just a week ago, Feb. 5, we agreed with the view of our trade experts that the Philippines was likely not a target of US President Donald Trump's aggressive campaign to impose higher tariffs on all manner of US imports, but that the Philippines should be aware of the risk and ramp up its efforts to develop alternative export markets. The news in the past couple of days, unfortunately, indicates that the objective is far more critical and immediate than anyone here imagined.
On Monday (Tuesday in Manila), Trump signed an executive order imposing sweeping tariffs on aluminum and steel imports — this follows the application of a 10-percent additional tariff on all imports from China — and repeated his vow to impose reciprocal tariffs on all imports, regardless of their source, "soon." Previously, Trump had ordered a review of all US trade deficits by April 1.
As the Philippines does not have a trade surplus with the US, importing far more than we export to that country might give the impression that we are safe. However, Trump's statements on what he sees as the role and value of tariffs — statements that are completely wrong, though that is no apparent impediment to his intentions — suggest that it is likely he would impose tariffs on all trading partners regardless of the balance of trade. In fact, as the Philippines has very little leverage in its relationship with the US in other respects, we actually might be considered more of a target than some other countries. That may sound farfetched, but as we also noted last week, the pace of change in US policy has been so rapid that we should probably expect surprises.
Even before any actual tariff penalty has materialized, uncertainty has grown within our own economy. Both the Philippine Stock Exchange Index (PSEi) and the peso slipped on Tuesday on news of the new steel and aluminum tariffs in the US, and while it will take some time for data to become available, anecdotally, there is already a "wait-and-see" sentiment growing among local businesses with respect to making new capital investments, regardless of what industry they are in.
All of this will add some interesting, if not exactly welcome, color to the discussions today at The Manila Times' 2025 Economic Forum, being held at the Dusit Thani Hotel in Makati. Our annual flagship forum event draws together policymakers and experts from key sectors, including banking and finance, energy, agribusiness, property development, and digital innovation, and is always an insightful and inspiring event.
While the discussions may follow their own course — this is, after all, what makes the forum exciting — what we are hoping to hear are ideas for further strengthening the Philippine economy by looking inward. That is not to say that we should take a page from Donald Trump's defective vision of autarky for the US and seek to isolate ourselves from the global system, far from it. Rather, we should seek to expand our own business sectors' value chains, both to expand and strengthen our domestic economy and to offer broader value to a more diverse set of potential trading partners.
The reason for this is quite simple. As developments in the US have shown, over-reliance on inward investment and labor and goods exports as economic policy can put the Philippines at risk of being materially affected by the domestic policy of other nations. That is something that is entirely beyond our control, but we can insulate ourselves against its most serious effects. We are not confident that is now the case with respect to the capricious and dangerous path the US seems determined to take, but we do believe it is something we can rectify quickly if the government and the private sector work together.
As a final thought, we would reiterate that assuming "business as usual" with the US, or for that matter, the rest of the world, is dangerous. Our belief that the Philippines has a bright future is as unshakable as ever, but that future will not be realized unless we work for it.