News
The Daily Scan – July 27, 2026 (Mon)
Only a Third of PH Exports to the US Actually Face the New Tariff
The US imposed a 12.5% forced-labor tariff last week, and DTI says $6.25 billion in exports are exposed, but $11.98 billion are exempt. Infrastructure spending fell 35% in May on stricter audits, while PEZA investment approvals jumped 70% to P152 billion. Today’s brief is ahead of Marcos’s SONA tonight.
| US Tariff Exposure | Infra Spending (May) | PEZA Investments | PH-Chile CEPA |
| $6.25B, 34.3% | -35.3% YoY |
P151.9B, +70% |
Talks concluded |
THE SNAPSHOT
The US slapped a 12.5% tariff on Philippine exports last week over a forced-labor probe, and DTI says $6.25 billion worth of goods, mostly leather, apparel, footwear, and toys, are exposed, while $11.98 billion in electronics and agriculture stays exempt. Infrastructure spending fell 35% in May as the government tightens audits on contractor payments, a trade-off between anti-corruption reform and growth that economists are still arguing over. But PEZA investment approvals jumped 70% to P151.9 billion in seven months, and the Philippines just concluded its first free trade deal with a Latin American country. Tonight Marcos delivers his SONA, and property analysts are already asking for two specific asks: a higher VAT exemption ceiling for housing, and an end to the PEZA moratorium in Metro Manila. Today’s brief is about reading the tariff hit against everything still moving forward around it.
SECTION 1 · Philippines
● DTI says $6.25 billion in PH exports affected by US tariff
WHAT HAPPENED
DTI estimates 34.28% of Philippine exports to the US, worth about $6.25 billion, will face the new 12.5% tariff that replaced the expired 10% baseline levy last week, after a US Trade Representative probe found the Philippines had not adequately restricted goods made with forced labor. Leather, apparel, footwear, and toys are most exposed. Electronics, auto parts, and most agricultural exports, worth $11.98 billion, are exempt.
UNCERTAIN
The USTR’s overall assessment of the Philippines is still ongoing, and DTI has not gotten a clear answer on which specific industry or company triggered the forced-labor finding.
WHY IT MATTERS
A former tariff commissioner told BusinessWorld the bigger question is whether the Philippines keeps its exemptions for electronics, the country’s largest export category to the US, since that would blunt most of the impact regardless of the forced-labor dispute.
RISK
Leather, apparel, footwear, and toy exporters face a direct cost hit on top of already high electricity and labor costs.
NEXT MOVE
If you export apparel, footwear, or leather goods to the US, check DTI’s exposure list against your own product lines this week and start pricing the 12.5% into your US contracts now.
● Gov’t infrastructure spending slumps in May
WHAT HAPPENED
Infrastructure and capital outlays fell 35.3% year on year to P80.1 billion in May, the Department of Budget and Management said, attributing the drop to strengthened review, audit, and validation procedures for contractor payment claims. First five-month spending slumped 42.9% to P269.4 billion.
UNCERTAIN
Economists disagree on how much of the decline reflects necessary anti-corruption reform versus implementation bottlenecks that could persist regardless of intent.
WHY IT MATTERS
A UA&P economist estimates the infrastructure slowdown alone could cut second-quarter GDP growth by 2 to 3 percentage points, and infrastructure spending needs to grow 10 to 15% for the rest of the year just to hit the government’s already-lowered 3.5% to 4.5% growth target.
RISK
Construction, materials, and logistics businesses tied to DPWH projects face continued payment delays as safeguards remain in place.
NEXT MOVE
If your business depends on government infrastructure contracts, build longer payment timelines into your 2026 cash flow planning rather than expecting a quick rebound.
● Ecozone investment approvals rise to P152 billion
WHAT HAPPENED
PEZA-approved investments rose 70% to P151.9 billion in the first seven months of the year, up from P90.96 billion a year earlier, on 174 new and expansion projects, PEZA said. These are projected to generate $5.91 billion in exports and about 26,047 direct jobs. The Netherlands, South Korea, and Singapore led foreign sources.
UNCERTAIN
July approvals alone were nearly 40% lower than the same month last year, so the strong seven-month total doesn’t mean every month is trending up.
WHY IT MATTERS
PEZA director general Tereso Panga said the investments are increasingly export-oriented and technology-driven, and the agency has already secured more than half its P300-billion annual target with five months still to go.
OPPORTUNITY
Manufacturing and IT-BPM firms positioning for PEZA accreditation are entering a period of accelerating approvals and stated policy support.
NEXT MOVE
If you’re weighing a PEZA-registered expansion, the approval pipeline is moving. Get your application in while momentum favors export-oriented and tech-driven projects specifically.
● Property analysts push housing VAT relief and PEZA moratorium lift
WHAT HAPPENED
Property analysts are urging the government to raise the P3.6-million VAT exemption ceiling for housing and lift the PEZA moratorium in Metro Manila ahead of tonight’s State of the Nation Address. Colliers said tax relief would shield homebuyers from mortgage rates as high as 8%, while Savills proposed limiting new Metro Manila PEZA accreditations to green-certified buildings.
UNCERTAIN
Neither proposal is confirmed government policy yet. Savills does not expect demand or supply to meaningfully recover until interest rates ease, which it places closer to 2027.
WHY IT MATTERS
Residential building permits posted double-digit declines as of May, and analysts say lifting the PEZA moratorium could be a “game changer” for office space left vacant by POGO exits, spilling over into residential, retail, and hospitality demand too.
OPPORTUNITY
A VAT ceiling hike or PEZA moratorium lift, if announced tonight, would directly benefit mid-market housing and Metro Manila office landlords.
NEXT MOVE
Property and real estate businesses should watch tonight’s SONA closely for either announcement. Both would be immediate, sector-specific catalysts if they land.
SECTION 2 · Worth Knowing
● Philippines secures first trade pact with Chile
WHAT HAPPENED
The Philippines concluded negotiations for the Philippines-Chile Comprehensive Economic Partnership Agreement, its first free trade deal with a Latin American nation, Trade Secretary Cristina Roque announced. The deal covers tariffs, investment, digital economy, labor, environment, and trade and gender chapters. Chile is a major copper supplier, a key input for electronics manufacturing.
UNCERTAIN
No signing date announced yet. Chile is currently only the Philippines’ 51st biggest trading partner, so near-term trade volume impact is likely small.
WHY IT MATTERS
Improved access to Chilean copper could strengthen supply chains for the Philippines’ electronics sector, the same category that’s exempt from the new US tariff and remains the country’s largest export earner.
OPPORTUNITY
Electronics manufacturers get a longer-term option to diversify copper sourcing outside existing suppliers.
NEXT MOVE
Electronics and manufacturing founders should start mapping what CEPA tariff schedules mean for copper input costs once the agreement is signed and ratified.
SECTION 3 · THE OPPORTUNITY BEHIND THE NEWS
A tariff headline hides an exemption story
The US tariff on Philippine exports made every headline this week, but read past the 12.5% number and DTI’s own breakdown tells a different story. Of the $13.44 billion the Philippines exported to the US in 2025, DTI says $11.98 billion, nearly two-thirds, is exempt: electronics, auto parts, and most of the country’s biggest agricultural exports all escape the new tariff entirely. Only $6.25 billion, concentrated in leather, apparel, footwear, and toys, actually gets hit.
Read together with Trade Undersecretary Ceferino Rodolfo’s point that Indonesia is 83% exposed and Malaysia 40%, this isn’t a story about the Philippines losing its US market. It’s a story about which sectors are exposed and which aren’t, and the gap between them is wide. Founders in electronics, auto parts, or agriculture should recognize this tariff barely touches them. Founders in apparel, footwear, or leather goods should treat this as the moment to either absorb the cost, pass it through carefully, or start diversifying markets beyond the US.
SECTION 4 · FOUNDER’S LESSON
Reform and growth don’t have to be enemies, but right now they’re fighting
Infrastructure spending fell 35% in May because the government tightened its review and audit process for contractor payments. Nobody disputes the tightening was needed. What economists are now arguing about is whether the safeguards themselves became the problem. Ser Percival Peña-Reyes of the Ateneo Center for Economic Research put it plainly: the lesson from past anti-corruption pushes isn’t that oversight should be relaxed, it’s that oversight has to be designed so it doesn’t paralyze the work it’s meant to protect.
That’s a lesson worth sitting with even outside government contracting. Any founder who has added an approval step, a review layer, or a new compliance check after something went wrong knows the same tension. The fix that stops the bleeding can also slow down everything that was working fine. The founders who get this right aren’t the ones who skip the safeguard, they’re the ones who go back and redesign it once the crisis passes, so it catches the real problem without taxing every legitimate transaction that flows through it. If a control you added months ago is still slowing down good work today, that’s not discipline anymore. That’s a control you forgot to revisit.
SECTION 5 · ONE REAL SIGNAL
P151.9 billion says capital isn’t waiting for the tariff dust to settle
While the tariff story dominated headlines this week, PEZA quietly reported something that deserves equal attention: P151.9 billion in approved investments over just seven months, a 70% jump from the same period last year, with more than half the agency’s full-year target already secured. That’s 174 new and expansion projects, projected to generate $5.91 billion in exports and over 26,000 direct jobs, arriving from the Netherlands, South Korea, and Singapore among others.
Nothing about this cancels out the tariff hit or the infrastructure slowdown. Both are real and both matter. But it lands the same week the US tariff news broke, and PEZA director general Tereso Panga was specific about the pattern. These investments are increasingly export-oriented and technology-driven, exactly the kind of capital that isn’t spooked by a 12.5% levy on leather goods and apparel. If you’re building anything export-facing or tech-driven in the Philippines right now, this is the number that matters more than the tariff headline. Capital is still choosing to come in at a faster pace than last year, and it’s choosing the categories the new tariff doesn’t touch.
Summarized in our own words with links to every source. We don’t reproduce full articles or bypass paywalls. Interpretation is labeled as such and kept separate from reported fact.
