Trump’s ‘Buy American’ could benefit Philippines

US President Donald Trump’s “Buy American” call to action is slowly taking shape, and how this will escalate and eventually affect relationships with China, the United States’ biggest goods trading partner, bears some watching.

If the US government were to take its protectionist stance against China in a long tit-for-tat war, many Americans are expected to suffer in the end. Farmers, tech manufacturers, consumers – all will find themselves at the short end of this trade war stick.

The US started this trade war by initially raising global tariffs of 10 percent on aluminum and 25 percent on steel, but subsequently exempting a handful of manufacturers, but not China.

This prompted China to recently impose an “eye-for-an-eye” response by imposing levies of between 15 to 25 percent on 128 of product imports from the US, including aluminum scraps, pork, fruits, wine, and nuts valued at $3 billion.

Well, it’s not yet exactly an “eye for an eye” because the big guns have not exactly been brought out yet, although there have been local rumblings about how China should retaliate to the selective US imposition of tariffs on aluminum and steel.

The recently announced levies by China on American imports is just a warning that the second largest economy in the world will not idly take sitting down what America is dishing out, and for that matter, any more future trade sanctions.

The more aggravating stuff that China could hurl back would be higher tariffs on soybean imports from the US, as well as Boeing aircrafts – that is, if Trump goes to round 2, i.e., imposing 25 percent tariff on a range of Chinese products that are expected to include communication technology and aerospace products, information and machinery.

This exchange of levy impositions could go on and on, and economists are betting America will lose more, especially when China chooses to get its import needs anywhere except the US, slow down on buying American debt papers, and take on the leadership mantle of global free trade.

Did our President Duterte foresee a shifting of global power?

Be alert for opportunities

It is still too early to see if Trump will follow through with more sanctions against the Chinese, but should this happen, there are a number of crumbs that we can pick up when the trade battle ensues full scale.

Agricultural products from the US that would be locked out of China would likely take a price dive, and that would be a boon to us. US soybeans, which could turn out to be a big trade war loser, are an import staple of the Philippines.

Service providers, like US business process outsourcing companies based in China, may have to relocate elsewhere; the Philippines is better positioned to absorb this.

There should be more, and even in the unlikely event that the trade war between China and the US escalates into something that would be beyond repair, let’s be alert for opportunities. After all, quite a few fortunes had been made on the scraps of war.

Grab-Uber deal

Two corporate takeovers were prominently featured in the local press last week. First was Grab’s buyout of Uber’s operations in the Philippines, and the second being Gokongwei family’s acquisition of supermarkets and groceries formerly owned by the Tantocos in the country.

The Philippine Competition Commission (PCC), as well as various regulatory agencies that would have a say on the two business transactions, are peering closely on just how the mergers will affect consumers and the public in general.

For Grab and Uber, the discussion had been hammered and finalized in a different country, but with implications on the Philippines since the acquisition involved Uber’s Southeast Asia operations.

The PCC has, recognizing its limitations with regards this merger, asked that it be allowed to do a “voluntary review” that would vet whether the deal had transgressed any anti-competition laws.

But with the merger expected next week by April 8, there is no time for the PCC to conduct anything substantially meaningful, or to be more precise, if it is competent within legal bounds to give its seal of “approval” to the done-deal.

This is the same situation that the respective competition watchdogs of Malaysia and Singapore find themselves, and the most that they have done is to issue a warning that they would be watching closely Grab’s conduct of business in the coming weeks.

Consumer fears come with stories of how China’s Didi Chuxing, which bought out Uber in 2016, had taken advantage of its monopolistic standing by supposedly charging higher rates than when there were two rivaling ride-hailing services.

Robinsons-Rustans buyout

Fortunately, there has been less controversy with regards the recent announcement by the two retailing giants in the Philippines, with both parties declaring that the deal would be finalized only when the approvals of the PCC and the Securities and Exchange Commission are acquired.

This said, Robinsons Retail Holdings Inc. (RRHI), which is buying the Rustans Supercenters for P18 billion, is seen to gain leverage in expanding its operations not only in the Philippines, but also overseas.

The Rustans Supercenters, formerly owned by the Tantocos, is now wholly owned by Mulgrave Corp. B.V (MCBV), which in turn is a member of the Dairy Farm International Holdings Ltd. group of companies.

Dairy Farm is associated with Wellcome, Maxim’s Catering, 7-Eleven, and IKEA among many other brands. The synergy with RRHI would only bode well for the manufacturing side of the Gokongwei family interests.

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