The United States has raised tariffs on Philippine exports from 17% to 20%, shaking investor confidence. The change, announced Wednesday by President Donald Trump, surprised many Taiwanese business leaders. It could significantly impact future Taiwanese investment in the Philippines.
Previously, the Philippines offered lower tariffs than most Southeast Asian countries. That edge is now gone. The new 20% tariff matches Vietnam’s rate. Although still better than Cambodia’s 36% and Malaysia’s 25%, the gap has narrowed. As a result, Taiwanese manufacturers might hesitate to relocate operations to the Philippines.
Lin Teng-feng, president of Taiwan Association Inc., said most Taiwanese firms in the Philippines serve the local market. Over 80% of them won’t feel the direct effects of the new tariff. Still, he warned that companies planning new operations will likely reconsider. The change could slow the pace of Taiwanese investment in the Philippines.
Many Taiwanese developers working in export zones may face unexpected hurdles. Firms might now delay or cancel relocation plans. Lin also pointed out that ongoing uncertainty over US tariffs on Chinese goods adds to investor hesitation. Manufacturers may adopt a wait-and-see approach.
Meanwhile, Chang Che-chia, who heads the Taiwan Chamber of Commerce in Subic Bay, remains cautiously optimistic. He believes the Philippines remains a strong competitor in the region. However, the tariff hike has weakened its appeal. Taiwanese investment in the Philippines may now be limited to risk-spreading strategies rather than major expansion.
Chang also raised concerns about Chinese overcapacity. He warned that cheap, surplus products from China could flood Southeast Asian markets. Such dumping may endanger local industries, including Taiwanese-run factories in the Philippines.
If businesses fail to handle this pressure, they could shut down. The combined effect of higher tariffs and regional market threats makes Taiwanese investment in the Philippines far more complex. Investors now face tougher choices as they look beyond China.
