Philippines Stands to Gain from Trump's Tariff Revamp, According to Study Insights
Revised Article:
The Philippines, like Indonesia, takes a hit with new U.S. tariffs, but things aren't equal for both nations. Here's the gist:
Both the Philippines and Indonesia have a similar risk score on the Tariff Exposure Composite Index, indicating a similar level of vulnerability to new U.S. tariffs. However, they distinctly diverge in terms of actual tariff rates and exemption levels.
Indonesia, with a whopping 32% tariff, is exposed more compared to the Philippines' 17%. The exemption coverage in Indonesia is also meager, shielding only around 10% of its exports to the U.S., while the Philippines benefits from a higher rate of tariff exemptions, reducing its exposure.
Indonesia's exports, primarily palm oil and footwear, are highly price-sensitive, making them more vulnerable to these tariffs compared to the Philippines. Economically diversified countries like the Philippines often suffer less from trade disruptions caused by tariffs, as their banks and economy are less dependent on the U.S. market.
The higher tariffs on Indonesia can lead to broader economic pressures like currency depreciation and monetary policy adjustments, affecting the nation more than the Philippines.
So, while on the composite index, the Philippines and Indonesia seem on par, Indonesia's higher tariffs, limited exemptions, and reliance on tariff-affected export sectors make it more vulnerable to these new U.S. levies. The Philippines' comparatively lower tariffs, better exemption coverage, and economic diversification reduced its exposure, potentially helping it weather this trade storm better.
Insights:
- Both the Philippines and Indonesia have similar vulnerability scores on the Tariff Exposure Composite Index, but Indonesia faces higher tariffs and less exemption coverage, making it more vulnerable to new U.S. tariffs.
- Indonesia's economy may be more exposed due to a greater reliance on tariff-affected export sectors, while the Philippines benefits from greater economic diversification.
- Higher tariffs on Indonesia can lead to broader economic pressures, such as currency depreciation and monetary policy adjustments, affecting the nation more than the Philippines.
- The International Monetary Fund (IMF) might consider shielding the Philippine industry and finance sector from potential risks arising from Indonesia's increased vulnerability to new U.S. tariffs.
- The Philippines' lower tariffs, higher tariff exemptions, and economic diversification provide a financial shield against the risks associated with trade disruptions.
- The IMF may suggest that Indonesia implement strategies to decrease its reliance on tariff-affected export sectors, such as palm oil and footwear, to reduce the risk posed by new U.S. tariffs.
- The risk of economic consequences, including currency depreciation and monetary policy adjustments, is higher for Indonesia due to its tariff structure and export composition compared to the Philippines.
