A full-blown trade war between the United States and China will not immediately affect the Philippines, a senior Bangko Sentral ng Pilipinas (BSP) official said, but the country should be prepared for second- or third-round impacts.
“What we export and import from US and China are very negligible. It is small. That is why the first-round effects will have no impact to us,” central bank Deputy Governor Diwa Guinigundo told reporters on Tuesday.
Tit-for-tat tariff exchanges will ultimately weigh on China and the US’ economic performance, however, the impact of which will spread globally.
“When economic performance of the countries involved is considered … then the impact could be more significant,” Guinigundo said.
While it is still too early to quantify the costs for the Philippines, he stressed that policymakers would “just have to be ready”.
“I think preparation is very critical and we have been doing it, we have been trying to diversify the source of our imports and the markets for our exports,” he said.
“Export market has been diversified actually with [a]veering away from US and Japan in favor of intra-Asean (Association of Southeast Asian Nations) trade. Our inter-Asean trade involving imports have also become important,” Guinigundo added.
Steep tariffs threatened by the US and China against each other took effect last Friday and both Washington and Beijing have warned of fresh measures. The US has also imposed punitive tariffs against the European Union and other allies such as Canada and Mexico, fanning fears of a global economic meltdown.