The re-election of US President Donald Trump and his aggressive tariff policies have set off a chain reaction across global markets, with emerging economies like the Philippines finding themselves caught in the crossfire of a renewed US-China trade war. A recent report by Japanese investment bank Nomura warns that the Philippines is particularly vulnerable to an influx of cheap Chinese goods, a trend that could intensify under Trump’s trade barriers and pose significant challenges to local manufacturers already struggling to compete.
Escalating Trade Tensions and Their Ripple Effects
Trump’s return to the White House late last year has brought with it a revival of protectionist policies aimed at reshaping America’s trade relationships. Among his first moves was the announcement of sweeping tariffs on trading partners, including a 17-percent “reciprocal” tariff on Filipino goods entering the US market, unveiled during his “Liberation Day” speech on April 2, 2025. Although this rate is among the lowest in Asia, Trump later introduced a 90-day pause on the tariff, while maintaining a universal 10-percent duty on all trading partners and punitive taxes on Chinese products. 
These measures, designed to curb US reliance on foreign goods, have inadvertently redirected China’s export strategy. With American markets becoming less accessible due to high tariffs, Beijing has intensified efforts to penetrate non-American markets, flooding countries like the Philippines with inexpensive manufactured goods. According to Nomura’s special report analyzing 45 countries, economies experiencing sharp increases in Chinese imports often face corresponding slowdowns in their manufacturing sectors—a pattern that the Philippines is already witnessing.
Euben Paracuelles, chief Asean economist at Nomura, highlighted the pre-existing challenge of Chinese imports in the Philippines, noting that the trend predates Trump’s second term. “China had been flooding the Philippines with inexpensive imports even before Trump had won a second term” said Paracuelles, pointing to Beijing’s search for alternative markets to offset losses in the US. The impact has been palpable, with Filipino industries such as basic metals, machinery, equipment, and furniture showing weaker performance as cheap Chinese alternatives dominate the market.
A Vulnerable Manufacturing Sector
The Nomura report underscores the Philippines’ heightened exposure to this influx, with the share of manufactured imports from China rising steadily between 2018 and 2024. This growing penetration has placed immense pressure on local producers, who struggle to match the low prices of Chinese goods. The situation risks worsening under a prolonged US-China trade war, as Beijing redirects even more exports to accessible markets like the Philippines, further intensifying competition.
For Filipino manufacturers, the stakes are high. The inability to compete on price threatens not only profitability but also jobs and industrial growth, key pillars of the country’s economic stability. Industries already grappling with high operating costs—such as power rates and bureaucratic hurdles—find themselves at a disadvantage against the economies of scale that Chinese producers leverage. Paracuelles emphasized the urgency of addressing these structural challenges, suggesting that “continuing structural reforms to boost competitiveness will be key” including efforts to diversify the manufacturing base and reduce operational costs.
Disinflation and Economic Policy Responses
While the flood of cheap Chinese goods poses a threat to manufacturers, it also carries broader economic implications. Nomura’s analysis suggests that the surge in low-cost imports could “intensify” disinflation in markets like the Philippines, where falling prices for goods may suppress inflation rates. This phenomenon, while potentially beneficial for consumers in the short term, risks creating deflationary pressures that could stifle economic growth if left unchecked.
For the Bangko Sentral ng Pilipinas (BSP), the central bank, this disinflationary trend offers a window to adjust monetary policy. Paracuelles noted that lower inflation could allow the BSP to further cut interest rates, providing much-needed support to the economy amid tariff-induced headwinds. Such measures could stimulate domestic demand and offer a lifeline to struggling sectors, though they must be balanced against the risk of fueling further import dependency.
Beyond monetary policy, the Philippine government faces calls to ramp up public spending and implement reforms to bolster local industries. Investments in infrastructure, education, and technology could enhance the competitiveness of Filipino manufacturers, while policies aimed at easing the cost of doing business—such as reducing power rates and streamlining regulations—might level the playing field against foreign competitors.
Navigating a Complex Global Landscape
The Philippines’ predicament reflects a broader challenge for emerging economies navigating the fallout of superpower rivalries. As the US and China continue to clash over trade, smaller nations risk becoming collateral damage, forced to adapt to shifting global supply chains and market dynamics. For the Philippines, the dual pressures of Trump’s tariffs and China’s export push underscore the need for a nimble and proactive economic strategy.
One potential avenue lies in diversifying trade partnerships beyond traditional markets. Strengthening ties with other Asean countries, the European Union, or Japan could reduce reliance on both the US and China, creating alternative outlets for Filipino goods and mitigating the impact of tariffs. At the same time, fostering innovation and specialization in high-value industries could position the Philippines to carve out a niche in global markets, less vulnerable to price competition from mass-produced imports.
However, such transformations require time and significant investment—resources that may be strained under current economic pressures. In the interim, the government must balance short-term relief measures with long-term structural reforms, ensuring that local industries are not permanently sidelined by the influx of foreign goods. Paracuelles’ call for leveraging the country’s comparative advantages offers a starting point, but translating this into actionable policy remains a formidable task.
Public and Industry Reactions
The unfolding trade dynamics have sparked concern among Filipino business leaders and workers alike. Manufacturers in affected sectors have voiced frustration over their inability to compete, with some calling for protective tariffs or subsidies to shield local industries. Others worry that such measures could provoke retaliation or violate international trade agreements, further complicating the Philippines’ position.
Among the public, opinions are mixed. While consumers welcome the lower prices of Chinese goods, particularly for everyday items, there is growing unease about the long-term impact on employment and national economic sovereignty. Social media platforms reveal a spectrum of sentiments, with some Filipinos expressing pride in local products and others questioning the government’s capacity to counter global trade pressures.
Looking Ahead Amid Uncertainty
As the second Trump administration reshapes global trade, the Philippines stands at a critical juncture. The convergence of US tariffs and Chinese import surges presents a formidable challenge, testing the resilience of local industries and the ingenuity of policymakers. While disinflation may offer temporary relief through lower interest rates, the deeper issues of competitiveness and industrial survival demand urgent attention.
For now, the path forward remains unclear. Will the Philippine government muster the political will to enact sweeping reforms, or will short-term fixes dominate the response? As the country grapples with these questions, the fate of its manufacturers hangs in the balance, a microcosm of the broader struggles facing emerging economies in an era of geopolitical and economic upheaval.
