Batangas, Philippines – For almost everyone in Asia, the last round of President Donald Trump’s hard tariffs is a disaster. Everyone except Liu Gang, who sees this moment as a chance to strengthen his electronics factory in the Philippines.
“I tell companies: ‘Come to the Philippines,” Liu said as he was up to be heard in the noise of various machines, weighing 400 tons each, stamping metal parts for Fujitsu ATMs on the floor of the factory on the ground floor.
Trump’s hardest tariffs came into force on Wednesday (9) on products manufactured in China and some of his rising rivals in Southeast Asia: Vietnam, Cambodia, Thailand and Indonesia. Fees will transform these industrial economies, but the most sought after places in the world for the manufacture of cars, bags, shoes and gadgets that Americans buy, worldwide where any company wants to be.
And there are also the Philippines.
Southeast Asian country has also been hit by tariffs, but its economic dependence on services and agriculture made it less exposed to Trump government’s reciprocal tariffs designed to punish manufacturing economies and bring jobs back to the United States. Products from the Philippines will be taxed at 17%, still high, but less than half of Thailand products will be charged and almost a third less than the Vietnam Tax.
Philippines can be the only government in the world that has called Trump’s fares of “good news.” Speaking hours after Trump announced them last week, a Filipino government press officer said the impact of tariffs would be “very minimal,” adding that “we can also win investors from countries with larger tariffs.”
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Suddenly the Philippines are emerging on the radar, while companies struggle to find alternatives to their factories in places like Vietnam and Thailand.
At least half a dozen companies with customers in the United States have contacted in recent weeks with the Liu factory and its neighbors in an area of Batangas province, 90 minutes from the south of Manila. Some pledged to transfer production. It is an unexpected turnaround for a country that has long needed the manufacturing capacity that has taken many other Asian nations of poverty.
Change can be temporary. Countries like Vietnam are running to close agreements with Washington and reverse rates that will be catastrophic to their economies. And the Philippines face a series of challenges that make it harder to open a factory quickly. Raw materials such as rubber and steel are difficult to obtain and more expensive than in countries like China. Construction takes more time. But the Philippines have a big, young workforce, which costs less.
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Liu began transferring most of the production of his Dongguan factory in southern China to Batangas in 2018, when Trump began a trade conflict with China during his first term.
The American and Japanese companies to whom he provides parts, such as Japanese Epson Electronics and Emerson, manufacturer of industrial equipment based in St. Louis, began to close their factories in China and move. It was difficult at the beginning. There were not many labor options. Raw materials like aluminum were three times more expensive than in China. The workers he hired were not as productive as in China.
Still, everyone was optimistic. “The Philippines are like China was 15 years ago,” said Kevin Lee, sales director at Hys Enterprise, owner of the factory in Batangas. Cheaper labor helped. It costs about $ 820 a month employing someone in China; In the Philippines, this same worker costs $ 274, said Lee.
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The decision to transfer China’s production to the Philippines has resulted this week, with the Trump government increasing the rates on Chinese products to over 100%.
Now Liu is promoting his factory as an alternative “One-Stop Shop” for factories in neighboring countries.
At the Fong Shann print factory, a few blocks away, four companies with factories in Vietnam, Taiwan and China have visited the factory in recent days to discuss the hiring of the factory to produce the packaging materials of the products they will start producing in the Philippines.
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“We already have four new customers,” said Alan Tu, deputy general general of the Fong Shann factory in the Philippines. “After the rate of tariffs, they are looking elsewhere.”
Inspired by customers in countries such as Australia and Britain, which care about disastrous supply chains and growing tensions between superpowers, some manufacturers have rented land in this special economic zone, one of the dozens that offer tax incentives to test whether they can make their products in the Philippines.
A short -driven distance in another industrial park, the Japanese company of Arkray medical devices is preparing to expand the production of its products sent to the United States, including health devices such as lactate monitors and diabetes and urinalysis test devices.
“We are discussing how we can change the supply chain,” said Hideaki Anai, Arkray Supply Chain Director. The company performs most of its development in Japan, but opened factories around the world, more recently in Vietnam and Mexico.
“We can carry perhaps 70% of the products we send to the US from other countries,” said Anai. The change, which will affect about half of all products sold by Arkray, will take a month to be implemented, as the company’s about 400 products will need to be registered differently and the labels will need to be changed, Anai said.
“The Philippines charged 0%, but now they will charge 17%,” he said.
“Compared to Japan, which now has 25%, and Taiwan, which has 32%, the 17%are much better.”
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