Philippines Navigates Trade Tensions Between US and China

The Philippines faces a complex trade balancing act, caught between its two largest economic partners: the United States and China. Escalating tensions and reciprocal tariffs have put Manila in a precarious position, forcing the nation to seek new trade routes and partnerships to safeguard its economy.

US and China Trade Dynamics

In 2024, the US remained the Philippines’ primary export market, while China dominated imports. This dual dependence presents strategic hurdles for the country. Rising tariff threats from Washington, a long-standing ally, coupled with maritime disputes with Beijing, complicate the situation.

In response to the US’s 17% tariffs, the Philippines has begun negotiations. Simultaneously, it is accelerating efforts to diversify its trade relationships. This includes pursuing free trade agreements with Canada and the European Union. Expanding ties with emerging markets closer to home is also underway.

Trade Imbalances and Opportunities

The Philippines exported $19.8 billion in goods to the US in 2024 and imported $9.3 billion, generating a $6.8 billion trade surplus. Many of these exports consist of electronics, an industry entangled in geopolitical issues and supply chain disruptions.

Conversely, the Philippines sent $13.1 billion in goods to China while importing $45.8 billion. This trade imbalance, skewed towards raw materials and intermediate goods, leaves Manila vulnerable to economic pressure from Beijing. The nation’s dependence on the U.S. for security adds another layer to this complex situation.

The US-China trade war has created some opportunities, particularly as supply chains shift. Lower tariffs and a skilled English-speaking workforce make the Philippines an attractive manufacturing location. The country also benefits from broader tariff exemptions for its exports, covering about one-third of its US-bound goods.

Philippine Responses and Alternatives

Manila is actively exploring bilateral and regional negotiation channels with Washington regarding the recent tariffs. Officials met with US Trade Representative **Jamieson Greer** to discuss mutually beneficial ways to strengthen bilateral relations. The Philippines also supports the ASEAN’s stance against retaliatory measures.

Beyond the US and China, the Philippines’ leading export markets include ASEAN, Japan, the European Union, and South Korea. The government is also looking to diversify trade with African and Latin American countries. However, trade with these regions is still limited. In December 2022, discussions began with Argentina, Brazil, Chile, and Mexico.

Intra-ASEAN trade could help the Philippines rebalance its export portfolio. Greater integration could allow the Philippines to strengthen its role in the regional value chain, especially in electronics and semiconductors. In 2023, total ASEAN trade was $779 billion, with the region’s economies further integrating (ASEAN Statistical Yearbook).

Canada’s Role and Future Prospects

The Philippines is actively pursuing trade diversification amid rising protectionism. Strengthening ties with alternative partners, including Canada, is key. In 2023, Canada imported C$2.2 billion in goods and exported C$1.2 billion, making the Philippines its third-largest export market within ASEAN.

Canada’s top exports to the Philippines include meat and wheat. Exploratory talks for a potential free trade agreement began in June 2025. An FTA with Canada could reduce tariffs on key exports. It would also support efforts to diversify export markets beyond the U.S.

Cooperation in clean energy and cybersecurity sectors provides additional opportunities for Canada. In 2024, the Canadian government supported the Philippines’ clean energy transition. Moreover, the Philippines would benefit from joint cyber training and governance initiatives. These efforts would be enhanced by Ottawa’s deployment of cyber attachés across the Indo-Pacific.