Limited Impact of US Tariffs on Philippine Companies
Financial research firm CreditSights anticipates that the 19 percent tariff recently imposed by US President Donald J. Trump on Philippine goods will have only a limited impact on the planned dollar bond issuances by local companies. This analysis is based on the key observation that these companies have very limited export exposure to the United States. As a result, CreditSights is maintaining its existing recommendations for Philippine corporates under its coverage. Firms such as ACEN Corp., Globe Telecom, Inc., Manila Water Co., Inc., Petron Corp., PLDT, Inc., and SMC Global Power Holdings Corp. are primarily focused on the domestic market, rendering the new tariff largely immaterial to their operations. Similarly, conglomerates Aboitiz Equity Ventures, Inc. and JG Summit Holdings, Inc. have export-heavy food manufacturing businesses predominantly across Asia rather than the US. While Aboitiz’s animal feed business might face increased competition from higher US feed imports, JG Summit’s snack foods business could conversely benefit from lower wheat input costs due to increased wheat imports from the US, highlighting a complex web of potential outcomes that largely favor the Philippine firms.
Navigating Specific Sectoral Impacts
The analysis by CreditSights delves into the varied impacts on specific companies and sectors, providing a detailed assessment of their resilience. The Ang-led conglomerate San Miguel Corp. (SMC), for instance, faces only marginal export exposure to the US, which can be effectively offset by its highly diversified business portfolio. Although its poultry and animal feed units might experience weakened domestic competitiveness and pricing, CreditSights deems the overall impact manageable, supported by SMC’s strong domestic brand equity, established market presence, and business diversification. Petron, another Ang-led company and an oil refiner, might see increased logistics costs if it is compelled to source crude oil and gas from the US, but it is protected by a full market pass-through mechanism that safeguards its margins. The local operations of fast-food giant Jollibee Foods Corp. are also expected to benefit from lower input costs for wheat and poultry due to higher US imports, while the domestic ports operated by the Razon-led International Container Terminal Services, Inc. (ICTSI) could see higher volumes from increased US imports.
Broader Economic Context and Corporate Resilience
CreditSights’ assessment provides crucial context for the new US tariff, which at 19 percent, is a reduction from an earlier 20 percent duty but remains higher than the 17 percent tariff announced in April. The firm’s analysis underscores a fundamental resilience within major Philippine companies, which are largely insulated from direct negative impacts of the tariff due to their focus on serving the robust domestic market. While some business units might face minor headwinds, such as Aboitiz’s animal feed or SMC’s poultry, these are counterbalanced by the strategic advantages of diversification, strong brand equity, and the ability to adjust pricing. The potential for lower input costs for companies like Jollibee and increased port volumes for ICTSI further illustrate that the effects are not universally negative. Ultimately, the report concludes that the established presence and diversified business models of these key Philippine firms provide a significant buffer against the new US trade policy, ensuring that their planned dollar bond issuances and overall financial health remain stable and on track.
