Beyond 100% tariffs: From risk to resilient trade

The Executive Order issued on July 31 further modified the US reciprocal tariffs and imposed a more uniform tariff at 19% to 20% for six of the 10 ASEAN countries: the Philippines, Indonesia, Malaysia, Thailand, Vietnam, and Cambodia. Laos and Myanmar have been slapped with the highest tariffs at 40%, while Brunei’s is 25%. In contrast, the April “Liberation Day” tariffs were more widely dispersed, ranging from 17% to 49%, with the Philippines having one of the lowest US tariffs following Singapore at 10%.

In terms of export performance of the five ASEAN countries, the Philippines had the smallest exports, valued at $73 billion in 2024. Vietnam was the largest with total exports amounting to $406 billion, followed by Malaysia ($330 billion) and Thailand ($301 billion).

In assessing trade risks arising from the reciprocal tariffs, one factor to consider is the country’s level of dependence on the US market — the higher the dependence, the more vulnerable the country is. Among the five countries, Vietnam is the largest exporter to the US, valued at $143 billion. Vietnam’s exports to the US accounted for 35% of its global exports, led by electronics (data processing machines, communication apparatus), furniture, and footwear.

A far second is Thailand, with US exports amounting to $66 billion representing 22% of its global trade. Its export mix is dominated by automotive parts, electronics, and transmission equipment.

For the Philippines, the US is the destination of 20% of its exports. Though small in terms of absolute value ($14 billion), these are largely concentrated in electronics such as semiconductor media, storage devices, and ICT (information and communications technology) parts alongside coconut oil and printing machines.

Next is Malaysia with US exports amounting to $54 billion and contributing 16% to its total global exports. Its shipments are heavily concentrated in high-value electronic components, particularly integrated circuits, semiconductor media, and ICT accessories. Indonesia’s exports to the US reached around $30 billion and represent only about 11% of its total exports which are heavily oriented toward primary and agro-based goods like palm oil, rubber, frozen seafood, and footwear.

The reciprocal tariffs are applied to all goods imported by the US except for an initial list of 1,039 product lines that are exempted due to US economic and national security interests. These include organic chemicals, wood, copper, electrical machinery and equipment, computers and semiconductor manufacturing equipment, telecommunications and networking devices, storage media and display panels, semiconductor devices and components, and integrated circuits.

Given these exemptions, another key factor to consider is a country’s export composition — the greater the share of exempted products, the lower the overall risk. These exempted products are more resilient and less vulnerable to immediate trade disruption. The Philippines, Vietnam, Malaysia, and Thailand share a common core of exempted electronics, ICT equipment, and machinery parts like electronics integrated circuits (ICs), especially processors and controllers; automatic data processing machines and their parts; and solid-state non-volatile storage devices and other semiconductor media. Indonesia’s exempted exports are heavily skewed towards primary products and low-tech goods. Indonesia has limited presence in electronics.

Malaysia benefits from the highest exemption coverage among the ASEAN-5 at 46%, particularly for high-tech components like integrated circuits and semiconductor manufacturing equipment. This high level of tariff shielding provides a strong buffer against the impact of the additional ad valorem tariffs. The Philippines also enjoys a relatively high exemption coverage of 33%, largely due to the structure of its exports. Electronics — including semiconductors — account for over 50% of the country’s total exports, and many of these products are included in the US exemption list. Thailand and Vietnam benefit from moderate exemption coverage (29% and 30% of US-bound exports, respectively) while Indonesia’s exemption coverage is limited at only 10%, exposing a large portion of its US-bound exports to tariff hikes.

The non-exempted products are the areas where countries face potential cost pressures, competitive disadvantage, or trade reallocation risks in the US market which include:

• The Philippines: electrical components, coconut oil, printing machines, rubber tires

• Vietnam: furniture, footwear, photovoltaic panels, consumer electronics

• Thailand: solar panels, TV cameras, car/bus tires, rice, consumer electronics, automotive parts, agri-food exports, low-to-mid tier electronics

• Malaysia: solar panels, rubber gloves, printing equipment, miscellaneous medical devices, low-end electronics

• Indonesia: palm oil, rubber tires, footwear, crustaceans, apparel

These non-exempted goods comprise the base of the tariff burden, which is another critical factor in assessing trade exposure. This is measured by the share of tariff costs in the export basket. Even when nominal tariff rates are comparable, countries with higher concentration of dutiable goods will experience a disproportionately higher impact.

Due to its limited exemption coverage, Indonesia registers the highest tariff burden at 17%. Vietnam follows at 14%, Thailand and the Philippines at 13%, and Malaysia at 10%. In terms of the absolute tariff costs, Vietnam incurs the steepest hit at $20.3 billion, followed by Thailand ($8.8 billion), Malaysia ($5.5 billion), Indonesia ($5.1 billion), and the Philippines ($1.9 billion).

With tariff structures now more harmonized, the Philippines’ previous tariff advantage has narrowed. Trump’s recent announcement of 100% tariffs on semiconductors — if applied broadly, would heighten the risks for countries most dependent on semiconductor exports, particularly the Philippines and Malaysia. Preliminary analysis shows that for the Philippines, where electronics (mainly semiconductors) dominate US-bound shipments, the removal of semiconductor-related exemptions would reduce its effective tariff shield, reducing exemption coverage from 33% to 19% and leaving a much larger share exposed to severe tariff penalties.

Malaysia, which enjoyed the highest exemption coverage at 46% would also see this buffer reduced to 21%, though its more diversified electronics portfolio may cushion the impact. Vietnam’s exemption coverage would likewise experience a slight reduction from 29% to 27%. Thailand and Indonesia, given their limited semiconductor presence, would be less directly affected by the semiconductor tariff, though their exposure to other tariffed products remains high.

These developments underscore that tariffs alone cannot sustain competitiveness. What matters more is a country’s capacity to adapt its trade and production structures, confront risks, and seize opportunities through swift action in supply chain diversification and integration of trade and industrial policy to manage heightened exposure. As the global trading system recalibrates, closer regional cooperation — particularly in supply chain integration, technology sharing, and coordinated trade strategies — will also be crucial in facing the impact of Trump’s tariffs and strengthening collective bargaining power.

In this environment, enhancing competitiveness through innovation, value upgrading, and industrial transformation is essential to sustaining growth in an increasingly fragmented global trade landscape.

Rafaelita Mercado-Aldaba is the current Department of Education’s (DepEd) strategic advisor for the Education Center for AI Research. She is a former Department of Trade and Industry undersecretary, an emeritus research fellow of the Philippine Institute for Development Studies, and a senior fellow of Action for Economic Reforms.