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The Philippines would be mildly impacted by the brewing global trade war started by United States (US) President Donald Trump and may even emerge as a "winner," according to the think tank Oxford Economics.
"There are no absolute winners in a trade war, but some will fare relatively better than others if the tariff regime President Trump announced on April 9 persists. Ironically, other than China, the relative winners list includes the very countries Trump targeted most heavily in his April 2 tariff regime: Vietnam, Cambodia, Malaysia, Pakistan, and the Philippines," Oxford Economics head of global emerging markets Gabriel Sterne said in an April 16 report.
The Philippines was among the countries slapped with reciprocal tariffs—17 percent for the former US colony—although postponed by Trump for 90 days.
For one, the Philippines is among the countries that yielded a negative difference between effective US tariffs and those in all markets in which it competes.
The Philippines' negative effective tariff rates reflected not only the relatively lower reciprocal tariff announced by Trump for the country, compared with most of its hard-hit Southeast Asian neighbors, but also implied a gained tariff competitiveness in the US, Oxford Economics explained.
In all, Oxford Economics deems China—widely seen as the top target of Trump's tariff spree—to take the brunt.
"Based on relative tariff movements alone, we estimate that virtually every economy other than China should gain market share of US imports. Among emerging markets, the top eight relative winners are all in Asia," including the Philippines, Oxford Economics said.
"There are strong incentives for Asian economies to export more to the US given that China may be forced to vacate many US import markets. That would increase these economies' trade surpluses with the US," the think tank added.
In Oxford Economics' so-called "Trump scorecard" reflecting trade vulnerability to US tariffs, the Philippines was in the middle of the pack, with a weighted sum of below 20 out of a maximum score of 40, indicating the most vulnerability.
In a separate April 16 report, the think tank Capital Economics said that "the extremely high US import tariffs imposed on China will likely strengthen the forces that have driven multinational corporates to shift production for the US market away from China and towards other emerging markets in recent years."
"Those emerging markets with spare capacity in their manufacturing sector are likely to gain US market share from China in the near term. But until some of the uncertainty about future tariff rates clears, many large long-term investment decisions about building new capacity in emerging markets are likely to be on pause," said Capital Economics chief emerging markets economist William Jackson.
For Capital Economics, "significant manufacturing re-shoring back to the US seems unlikely in our view, particularly in the lower value-added industries where emerging markets have a significant cost advantage."
"The upshot is that US import demand is likely to shift towards other emerging markets. Those emerging markets that have spare capacity in sectors that overlap with what China produces for the US market are likely to raise output. Countries such as Mexico, India and Vietnam will probably continue to gain US market share at China's expense," according to Capital Economics.
