PHL seen indirectly affected by Trump’s 25% tariff on some chips

US PRESIDENT Donald J. Trump’s 25% tariff on certain semiconductors, particularly on advanced computing chips, is likely to affect Philippine manufacturers only indirectly, an analyst said.

John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, said the US move is “unlikely to have a large immediate impact on Philippine exports.”

“Most of the country’s electronics shipments are assembly, testing, and components that are often covered by the World Trade Organization Information Technology Agreement or not directly targeted,” he said via Viber.

He said that the bigger risk is the indirect effect, which includes heightened US protectionism.

“That could disrupt global semiconductor value chains, raise costs, or prompt firms to reconfigure sourcing,” he said.

“Over time, Philippine exporters tied to US-centric supply chains should watch for spillovers, but for now the effect is more sentiment- and strategy-driven than a direct export hit,” he added.

In a proclamation dated Jan. 14, Mr. Trump laid down his plan of action to address the threatened impairment of national security stemming from imports of semiconductors, semiconductor manufacturing equipment, and their derivative products.

Under the two-phase plan, which follows an investigation under Section 232 of the Trade Expansion Act of 1962, the US is expected to pursue negotiation of agreements with any foreign jurisdictions.

“I have also determined that it is necessary and appropriate to impose an immediate 25% ad valorem duty on the import of certain advanced computing chips and derivative products when such importation does not contribute to the buildout of the US technology supply chain and the strengthening of domestic manufacturing capacity for derivatives of semiconductors,” he added.

However, Mr. Trump clarified that the tariff excludes chips used for US data centers, startups, and non-data center consumer applications, among others.

University of Asia and the Pacific Associate Professor George N. Manzano said Mr. Trump’s announcement does not indicate a blanket tariff on all types of semiconductors.

“The document mentions that the high tariffs will apply to a very narrow category of semiconductors that are an important element of (the Trump administration’s) artificial intelligence and technology policies,” he said.

“I think these are the chips incorporating more advanced technology. This will significantly impact the exports of countries that make these advanced or high-performance chips or computer systems,” he added.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the proclamation could potentially slow Philippine semiconductor exports.

However, he said that the industry is still adopting a wait-and-see stance on Mr. Trump’s previous threats of as much as a 300% tariff on electronics.

“Thus, there is a need for the Philippines to diversify further its export markets and products,” he said via Viber.

“This could also be seen as a negotiating tactic by Trump to get more concessions or investments for the US,” he added. — Justine Irish D. Tabile