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PH to be affected by fallout from Trump's trade war

A TRADE war launched by the United States against Canada, Mexico and China will have consequences for other countries worldwide including the Philippines, analysts said.

The Department of Trade and Industry said the country's exports could also be affected and that the government would be looking to engage with the US on mutually beneficial solutions, including possible preferential agreements.

«The extent of the impact will depend on a number of factors, including the final tariff rate and the response of other countries,» Trade Secretary Cristina Roque said.

US President Donald Trump on Saturday announced duties of 25 percent on imports from Canada and Mexico and 10 percent on imports from China, claiming that the three countries needed to do more to curb the flow of narcotics and illegal immigrants.

Canada and Mexico quickly retaliated and China is expected to follow.

Moody's Analytics economist Sarah Tan said that «while these are not direct tariff hikes on the Philippines, the country will not be completely isolated from the ongoing trade tensions.»

She said that softer global demand, particularly from the US and China — two of the Philippines' major trading partners — could dampen the country's export performance.

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Tan also warned that the «tariff hikes could cause global interest rate nominalization to slow,» potentially affecting the strength of the peso and hinder borrowings.

«Should demand for Philippine merchandise exports slow, it will hit industrial production and potentially prompt firms to pare back investment plans,» she added.

Still, Tan said that the Philippines, given its strong domestic economy, would still be one of the better performers in the region.

«As for new tariffs, we don't expect the Philippines to be high up on President Trump's hit list for two reasons,» she continued.

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«First, the Philippines' trade deficit with the US is small. Second, the country has an increasingly close defense partnership with the US as the Philippine fishing fleet faces harassment from China in the South China Sea.»

Rizal Commercial Banking Corp. chief economist Michael Ricafort, meanwhile, also said that strong local demand could

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