The Philippine electronics industry would suffer from a “major impact” following a brewing trade war between the United States and China, two of the country’s biggest export and import markets, a top official said.
This developed as the economic powerhouses announced earlier this week that they would slap tariffs on billions of dollars worth of imports from both sides.
Local industry officials interviewed by the Inquirer, however, were skeptical at best if this would push through. But if this does happen, the electronics industry might take a hit in the long term, according to the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi).
“If this does push through, it’s going to be a major impact [on the Philippine industry] because the US and China are big export destinations and import origins,” said Seipi president Danilo Lachica. “Long term, of course, customers would look for the lower costs of manufacturing. So long term, it could probably reduce our export revenues.”
The Philippine Exporters Confederation Inc. (Philexport), the umbrella organization of Philippine exporters, said that this was due to the fact that the country sends electronic parts to both economic powerhouses, which would then be used by China to export to the US, and vice versa.
“So, if China cannot [export] to the US [like it used to], and US lacks a market in China, it might affect us in the sense that there would be weaker orders from China and the US,” said Philexport president Sergio R. Ortiz-Luis Jr.
According to Seipi data, the United States and China respectively ranked second and third top export destination of the local industry in the last two years.
Electronics exports, which yearly account for at least half of outbound goods, reached $32.7 billion last year, marking an all-time record high. Of this figure, China and the US each accounted for more than 12-percent market share.
Both officials had doubts that the planned tariffs would materialize. Lachica noted that they had not seen the impact yet since none of their member companies have raised concerns this early.
“Whether it’ll push through remains to be seen. Maybe saner heads would prevail and avoid a major trade war,” Lachica said.