Navigating a new era of reciprocal tariffs: Strategic implications for the Philippines and selected ASEAN economies

Amid the evolving U.S.-China tariff realignment and the broader restructuring of global value chains, this paper evaluates the vulnerability and strategic positioning of the Philippines alongside four other ASEAN economies-Indonesia, Malaysia, Thailand, and Vietnam. For the ASEAN-5, the key challenge lies in minimizing exposure to import flooding from displaced Chinese goods and potential exclusion from global value chains if competitiveness falters, while also capitalizing on trade and investment diversion opportunities. Using a Tariff Exposure Composite Index (TECI), the assessment reveals that the Philippines and Malaysia fall within the moderate-to-low risk tier, owing to relatively low reciprocal tariff rates and strong exemption coverage-particularly for high-value electronics. Indonesia is classified as moderate risk but is more vulnerable due to limited exemption coverage and a dependence on lowtech, commoditized exports. Meanwhile, Vietnam and Thailand are in the high-risk tier, driven by steep tariffs, significant U.S. export dependence, and only moderate levels of tariff exemption. Absent a coordinated and forward-looking policy response, the Philippines and its ASEAN neighbors risk becoming passive bystanders in an increasingly fragmented trade landscape. However, with strategic alignment of trade and industrial policy, the deployment of robust trade defense tools, and deeper ASEAN collaboration, these economies can reframe the current disruption as a platform to reposition themselves as high-trust, tariff-resilient production hubs in the new global trading order.