U.S. tariffs could lead to significant financial consequences and job losses in the Philippine furniture industry, warn local manufacturers.
Grim Warnings from Philippine Furniture Makers
Philippine furniture companies are sounding the alarm about a potential hit to their industry and job losses following the possibility of a 17% tariff on their US exports.
According to Philexport, a coalition of furniture trade associations including CFIP, PFIF, and CFIF, warned the Department of Trade and Industry in a May 5 letter about the potentially dire consequences of the tariff.
Here's the lowdown on what's at stake:
On the Line: Jobs Galore and a Strong Market
The proposed tariff could erode the Philippines' price advantage in the lucrative US$1.8 billion furniture import market, with dire repercussions for the domestic industry. A gloomy forecast suggests factory shutdowns and the potential loss of around six million jobs spanning the furniture supply chain.
The industry's eight percent annual growth target and the 2030 plan to establish the Philippines as Asia's design innovation hub and a global leader in high-end furniture could also be in jeopardy.
Coping Strategies and Lifelines
To counter the tariff's impact, furniture makers are looking for diplomatic maneuvers and appealing for the retention of zero tariffs in bilateral trade negotiations. They also see expanding workforce training programs, like those offered by the Technical Education and Skills Development Authority (Tesda), as a saving grace for roughly 45,000 artisan-based furniture production livelihoods.
Moreover, the trade groups are advocating for a reciprocal trade strategy, such as ramping up US hardwood imports by 50%, offering a more sustainable and high-quality alternative to imports primarily sourced from Asian countries.
A Looking Glass: The State of the Proposed Tariff
Negotiations are ongoing, with a technical working group discussing a future roadmap for US-Philippines trade. The discussions aim to find a resolution before the 90-day reciprocal tariff pause expires.
In the meantime, the furniture industry remains hopeful, emphasizing that their non-upholstered rattan and abaca products, primarily sourced from native resources, don't pose a competitive threat to American domestic manufacturers.
Sources:2. Philstar4. CNN Philippines5. Rappler News (Hypebae)
- Despite the potential impact of a 17% tariff on their exports to the US, furniture makers in the Philippines, such as those in Cebu, are seeking diplomatic solutions, like retaining zero tariffs in bilateral trade negotiations, to safeguard their jobs and the growth of the industry.
- The government's 2030 plan to establish the Philippines as a global leader in high-end furniture could face serious challenges if a 17% tariff is implemented, potentially leading to significant job losses in regions like Pampanga, where the furniture supply chain is widespread.
- To counter the potential job losses and factory shutdowns in the Philippine furniture industry due to a 17% tariff, trade groups are advocating for reciprocal trading strategies, such as increasing US hardwood imports by 50%, which could provide a sustainable and high-quality alternative to imports primarily sourced from Asian countries.
