The benchmark Philippine Stock Exchange Index (PSEi) jumped over 100 points, or 1.68 percent, to 6,462.25. The broader All Shares index also gained 1.33 percent, or 50 points, to 3,807.35.
President Marcos secured a deal in Washington that cut US tariffs on Philippine goods from 20 percent to 19 percent, while granting zero-tariff access for select US exports, including automobiles.
“While it looks like a modest gain, this could make our products a bit more competitive in the US market,” Wendy B. Estacio-Cruz, Unicapital Securities research head, told InsiderPH.
“[T]the current 19 percent US tariff on Philippine goods is now the second lowest in Southeast Asia, next to Singapore’s 10 percent,” she said.
“We think that the trade balance may tilt further in the US favor but this could be a foot in the door for further rounds of negotiation,” she added.
The US purchased $12.1 billion worth of Philippine goods last year or 17 percent of the country’s exports.
Limited impact
“The biggest tariff exemption is on cars, but Ford and Tesla are hardly a threat to [GT Capital Holdings’] Toyota or [Ayala Corp.’s] BYD,” said Alfred Benjamin R. Garcia, research head of research at AP Securities Inc., told InsiderPH.
“More agricultural imports of wheat, soybeans, etc should also help with food security,” he added.
Food security
Jonathan Ravelas, business strategist and Reyes Tacandong & Co. senior advisor, said zero tariff imports for key agricultural inputs will help stabilize or lower domestic food prices—one of the key thrusts of the Marcos administration.
“Soybeans are key ingredients, which we don't have, that’s used in making feed [for livestock],” he told InsiderPH.
“So, companies like Bounty Fresh, San Miguel-Magnolia—a big portion of our agriculture industry depends on these feeds,” he said.
He noted, as an example, that a chicken requires three kilograms of feeds to gain one kilogram of weight.
Electronics exports to get hit
He said the flip side of the trade deal is that Philippine exports of electronics and semiconductors will be slapped with a 19-percent tariff, making them more expensive for US customers.
“This is the bad side of tariff. To offset this impact, we can have competitive devaluation [of the Philippine peso],” he said.
A weaker peso lets exporters earn more in local currency per US dollar, softening the hit from the 19 percent tariff, although it won’t fully ease the higher costs for US buyers.
Ravelas said a lower tariff rate is ideal, but he understands the Philippines’ position in these negotiations.
“We could have probably done something lower, but you know, beggars can’t be choosers,” he said.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
