PH shipping braces for Trump tariff impact

THE unexpected imposition of reciprocal tariffs by the United States has sent ripples of uncertainty through global trade, with the Philippine shipping industry bracing for potential disruptions.

According to Patrick Ronas, president of the Association of International Shipping Lines (AISL), the announcement came as a surprise and is poised to cause a recalibration of shipping schedules in the near term.

"For trade to the US, expect some realignment to the shipping schedules until it is clear what the tariff will be after the 90-day period," Ronas stated in an interview with The Manila Times. He further noted the flurry of diplomatic activity expected as countries, including the Philippines, seek to engage with the US to understand the implications of the new tariffs.

The major shipping carriers heavily reliant on the China-to-US trade route are anticipated to bear the initial brunt of these tariffs. "The major carriers who trade with the US from China will be the ones to take a hit as more than 50 percent of their business is from China to the US," Ronas explained.

However, Ronas believes this impact will be temporary. "Eventually, stocks will run out, and they will need to buy from China again," he predicted.

For Philippine exporters to the US, the new tariff regime presents a direct challenge. "As for us, exporters to the US will be affected by the new tariff, and the government is working on this," Ronas affirmed.

Recent reports indicate that the Philippines faces a 17-percent tariff on its exports to the US, a rate higher than the baseline 10-percent tariff applied to most other nations. Studies suggest this could make Philippine goods significantly more expensive for American buyers, potentially impacting demand for electronics, garments, and agri-based products.

Despite the challenges for exporters, the outlook for international shipping to the Philippines remains relatively stable. "For international shipping to the Philippines, we are a net importer, and therefore we expect that the shipping services in play will continue," Ronas said.

The Philippines primarily imports from China, Japan, Korea, and other Southeast Asian countries, and Ronas anticipates only a marginal effect on this trade in the near term, suggesting "it's business as usual" for these routes.

Background and wider implications

The imposition of these reciprocal tariffs is the latest move in a broader trade policy shift by the US, causing concern among its trading partners. While the specifics of the tariffs are still unfolding, the potential for increased costs for consumers and businesses is a significant worry globally.

For the Philippines, the US remains a crucial export market. In 2024, the US was the Philippines' largest export destination, accounting for a substantial portion of the country's total exports. The new tariffs could lead to slower demand for Philippine products in the US, potentially impacting the overall economic growth of the Philippines.

However, some analysts suggest that the Philippines might be less severely affected compared to some of its Southeast Asian neighbors, which face even higher tariff rates. This difference could potentially create opportunities for the Philippines as US buyers look for alternative sources.

The Philippine government has acknowledged the potential impact and is reportedly working on strategies to mitigate the effects on local exporters. This could involve exploring alternative markets or seeking negotiations with the US on specific product categories.

The Association of International Shipping Lines (AISL) plays a crucial role in the Philippine maritime industry, representing the interests of major shipping lines operating in the country. Their insights are vital in understanding the immediate and long-term consequences of global trade policy changes on the movement of goods and the Philippine economy. Ronas's analysis provides a crucial perspective on the unfolding situation and its potential impact on various stakeholders.

As the 90-day period progresses, businesses and governments worldwide will be closely monitoring developments to gauge the lasting effects of these tariffs on the intricate web of international trade and shipping.