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Philippine furniture faces uphill climb as Vietnam holds firm on cost edge

Despite a proposed 17% US tariff on Philippine furniture exports, Vietnam continues to hold a strong cost advantage, according to the Chamber of Furniture Industries of the Philippines (CFIP). CFIP Director General Ajun L. Valenzuela noted that Vietnamese furniture remains approximately 40% cheaper than equivalent Philippine products, mainly due to lower labour and production costs.

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In 2024, Vietnam exported $16 billion worth of furniture, dwarfing the Philippines' $200 million. The US is the Philippines' largest export market, accounting for nearly half of its total furniture exports at $99 million. While the 17% US tariff may narrow the price gap with Vietnam, Mr. Valenzuela warned it is 'not a solution.'

The US had planned reciprocal tariffs on several trading partners in April, though implementation has been suspended for 90 days. A temporary 10% tariff now applies, with Vietnam potentially facing a 46% rate from July if new terms are not agreed.

Valenzuela sees opportunity for the Philippines to attract US buyers looking to diversify away from Vietnam, especially in "niche and premium segments," where Filipino craftsmanship and use of indigenous materials can offer a unique value proposition.

However, challenges persist. Higher labour costs—averaging $420–$450 per month versus Vietnam's $300–$350—along with expensive electricity, limited scale, and reliance on imported wood continue to constrain competitiveness. Meanwhile, Singapore's potential role as a re-export hub for Vietnamese goods raises concerns over enforcement of rules of origin.

The recent exemption of wood and wood products from new US tariffs could benefit Philippine manufacturers by lowering material costs. Still, Valenzuela emphasised that long-term growth in the US will depend on consistent investment in branding, marketing, and compliance.

Source: www.bworldonline.com

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