US tariff to weigh on Philippine growth

MANILA, Philippines — The steep new tariff imposed by the United States on Philippine goods, alongside the broader impact of US President Donald Trump’s massive fiscal stimulus, is expected to weigh on the country’s economic growth, according to analysts.

In a report, Nomura Global Markets Research said the recently announced 19 percent US tariff on Philippine exports could reduce the country’s gross domestic product (GDP) growth by 0.4 percentage point from its baseline forecast, citing direct trade losses from higher duties.

“We think the tariff rates set by the US for Indonesia and the Philippines at 19 percent are fairly high and therefore pose downside risks to their respective growth outlooks,” Nomura said. “We estimate the direct effects could reduce our baseline GDP growth forecast by 0.4 percentage points in the Philippines.”

The Japanese investment bank noted that the 19 percent rate, which was set after Trump’s meeting with President Marcos in Washington, was higher than expected, even topping the “Liberation Day” benchmark of 17 percent and Nomura’s earlier estimate of 10 percent.

Nomura’s baseline forecasts for the Philippines is at 5.3 percent in 2025 and 5.6 percent in 2026. “Despite reaffirming strong ties with the US, the final tariff was significantly higher than anticipated,” it said.

Based on Nomura’s estimate, a 0.4-percentage-point reduction due to the US tariff would lower its projected Philippine GDP growth this year to 4.9 percent from 5.3 percent, and to 5.2 percent in 2026 from 5.6 percent.

The new tariff forms part of a wider set of protectionist measures under Trump’s trade agenda, which also includes tariffs on other Southeast Asian countries. For the Philippines, the direct effects will likely be felt through weaker export growth and a wider trade deficit, Nomura said.

The US is one of the Philippines’ top export markets, accounting for $12.14 billion or 16.6 percent of total exports in 2024. A US slowdown, compounded by trade restrictions, could hit demand for Philippine goods and services.

In a separate note, Metropolitan Bank & Trust Co. (Metrobank) said the passage of Trump’s “One Big Beautiful Bill Act” could trigger higher US interest rates and strain capital flows to emerging markets like the Philippines.

As a result, the Bangko Sentral ng Pilipinas may be forced to hold off further rate cuts, or even hike rates, to keep Philippine assets attractive to investors, Metrobank said.

Metrobank also flagged possible risks to remittances, with over two million overseas Filipino workers based in the US. OFWs sent a record $39.3 billion in 2024, propping up household consumption, which drives more than three-fourths of the country’s GDP.

“If OFWs get pay cuts or even lose their jobs, this would cap remittances headed for home,” Metrobank said. “A decline in remittances pulls down household expenditure, rocking the boat for growth.”

While both Nomura and Metrobank acknowledged that the full impact of these developments remains uncertain, they emphasized that the risks to the Philippine economy are clearly tilted to the downside.