New US tariff to affect $6.25B in exports – DTI

ABOUT a third of Philippine exports to the United States will likely be subjected to a 12.5-percent tariff imposed last Friday over the country’s alleged failure to halt imports of goods made using forced labor.

“A preliminary assessment using 2025 trade data indicates that 34.28 percent of Philippine exports to the US, valued at approximately $6.25 billion, may be subjected to the 12.5-percent tariff,” Export Management Bureau Director Bianca Skyimte said.

The duty was the higher of two rates imposed by the Office of the US Trade Representative (USTR) on 60 countries. Those ruled to have failed to effectively enforce prohibitions on goods made with forced labor — as opposed to those like the Philippines that failed to impose bans — were slapped with a lower 10-percent duty.

Malacañang has rejected the assessment, saying that the Philippines has a “strong policy against forced labor.” A day prior to the US announcement, the Trade, Labor and Finance departments agreed to strengthen interagency coordination to investigate and ban imports of goods made with forced labor.

Officials also claimed compliance with international labor conventions and provisions under the Customs Modernization and Tariff Act empowering the government to prohibit the entry of goods made with forced labor.

Sykimte, who said that $11.98 billion of the country’s exports to the US would be exempt from the new tariffs, said the goods to be covered would be labor-intensive products such as leather and travel goods, apparel, footwear and toys.

The USTR determined exemptions to the new tariffs, including raw materials that could become unavailable in the US or cause economy-wide disruptions, products that cannot be grown or produced in sufficient quantities or reasonable prices in the US or obtained from other sources and articles where tariffs may not substantially contribute to the elimination of forced labor.

The DTI said that for the Philippines, the exemptions include electronic products (semiconductors, automatic data processing machines, integrated circuits, printers, headphones, and projectors); automobile parts (ignition wiring sets and lead acid batteries); and aircraft parts, including seats.

It also includes agricultural products such as coconut products (copra or crude oil, water or juice, and desiccated); pineapples (preserved, juice, dried, fresh, and jams); bananas (fresh, frozen, and dried); mangoes (dried, preserved, purees, and frozen); cocoa; frozen cassava; taro (frozen and dried); pastries; and biscuits.

Also exempted are minerals such as copper ores and concentrates, nickel ores and concentrates, and cobalt ores and concentrates, the DTI said.

Compared to other countries, the DTI said that coverage of Philippine exports subject to the new tariffs was lower. Skyimte said that based on their export portfolios, coverage for Indonesia and Malaysia stood at 83 percent and 40 percent, respectively.

Malacañang last Friday said that the Philippines would continue to engage with the US on the issue and Trade Undersecretary Ceferino Rodolfo said the USTR had given assurances that assessments were continuing.

The US, he added, was also looking forward to receiving a copy of the joint administrative order signed by the Trade, Labor and Finance departments.

‘[W]e do not subscribe to forced labor,” Rodolfo said.

“De facto, we really don’t have a problem in terms of entry of goods that have [a] forced labor component,” he claimed.

“We have studied this very carefully; we have also counterchecked it with respect to companies that they have flagged under their US Forced Labor Protection Act.”