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Opinion

Red light, green light

EYES WIDE OPEN - Iris Gonzales - The Philippine Star

The Trump administration announced yet another surprising trade policy pivot, this time a sweeping tariff exemption on key tech imports.

These are the goods that, in this day and age, make the world go round – smartphones, iPhones, laptops, semiconductors, data servers and other electronics.

It was another headline-grabbing announcement, which came on the heels of the surprising 90-day reprieve on Trump tariffs.

In all, the tariff exemptions on these key tech imports will shield them from both the planned 125 percent tariff hike and existing reciprocal tariffs on Chinese goods.

President Donald Trump later clarified that this was only temporary.

“NOBODY is getting ‘off the hook’ for the unfair Trade Balances, and Non Monetary Tariff Barriers, that other Countries have used against us, especially not China which, by far, treats us the worst!” US President Trump posted on Truth Social.

According to a CNN report, Commerce Secretary Howard Lutnick, indeed, clarified that the Trump administration’s decision on Friday to exempt electronic devices from tariffs was only a temporary reprieve, and that those products will eventually face separate levies.

This, not surprisingly, is adding more confusion to an already chaotic rollout of US tariffs.

Industry leaders across the globe, I’m sure, are scratching their heads in confusion, unable to plan or calibrate for the long game.

Massachusetts Democratic Senator Elizabeth Warren, appearing on CNN’s “State of the Union,” described the confusion about shifting tariff rates and how smartphones and computers were spared from reciprocal tariffs as “chaos and corruption.”

“Investors will not invest in the United States when Donald Trump is playing ‘red light, green light’ with tariffs and saying, ‘Oh, and for my special donors, you get a special exemption,’” Warren said.

Good news for Asia

In any case, US-based investment fund manager Eric Jurado said the move to exempt key tech imports means good news for Asia, including the Philippines, at least for now.

Early data point to a significant windfall for the region’s tech-heavy exporters. Taiwan leads the pack, with 64 percent of its US-bound shipments now exempt. Malaysia (44 percent), the Philippines (33 percent), Thailand (30 percent) and Vietnam (29 percent) follow closely. Even China, despite tense trade relations, sees 22 percent of its exports spared.

Taiwan, Jurado says, gains heavily from data center and AI-server products, reflecting its dominance in next-gen computing gear. Smartphone-related exports headline the exemptions for China, Vietnam and India – countries central to global mobile assembly.

“Flat-panel displays also made the exemption list, benefiting South Korea, Vietnam and China. However, previously announced carve-outs for semiconductors may temper the net gain for countries like Malaysia,” Jurado says.

The bottom line, he said, is that while broader trade talks continue, this tactical easing provides targeted relief and could reshuffle near-term supply chain dynamics – especially in the high-stakes tech sector.

Against this backdrop, the Philippines can focus on improving the business environment in the country so that we may attract investments, especially those looking for places in Southeast Asia to relocate.

As it is now, we are lagging significantly behind our neighbors such as Malaysia and Vietnam.

But the work continues.

Ease of doing business

We must improve the business processes and make it easier for investors to set up shop in the Philippines.

A major thorn in the side of investors is corruption in local government units. Many LGUs are notoriously corrupt, making it difficult for businesses to expand in their localities if they don’t shell out grease money.

Some big businesses told me that even with the established Green Lane for Strategic Investments, which certifies priority investments, they are back to zero once they reach the LGUs.

But even national agencies are still problematic.

No less than the Office of the US Trade Representative said corruption in the Philippines remains a major barrier to trade and investment.

In its 2025 National Trade Estimate report to US President Donald Trump and Congress, the USTR said corruption is a pervasive and longstanding problem that US businesses have to deal with in the Philippines.

“National and local government agencies, particularly the Bureau of Customs, are beset with various corruption issues. Both foreign and domestic investors have expressed concerns about the lack of transparency in judicial and regulatory processes,” the USTR said in its report.

The BOC has always been mired in corruption, but in this increasingly challenging trade environment, it is even more urgent to address this.

The second thing we must focus on is to boost the competitiveness of our local industries.

In an increasingly challenging trading environment, the government must increase its support for local industries as competition heats up in the global market.

Our major industries that need strong support now are agricultural products, minerals, electronics and garments.

For sure, higher tariffs will hit our economy – directly as the cost of exporting our products increases, and indirectly, if the global economy grinds to a halt.

And by the time this piece comes out, Trump may have another surprise announcement.

Our policymakers must negotiate with the US now, during this crucial period before any reclassification happens yet again.

But is the Marcos administration capable of preparing us for this trade war?

Sadly, I am not hearing enough from our government officials about this. We must already have a tariff-related emergency program or blueprint on how to deal with these ongoing developments.

That is perhaps another risk we’re facing – a government that isn’t moving fast enough to lead us in this “red light, green light tariff” era.

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Email: [email protected]. Follow her on X @eyesgonzales. Column archives at EyesWideOpen on FB.

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