Toyota Motor Philippines seeks JPEPA review after US tariff deal
Manila Standard | 27 July 2025
Toyota Motor Philippines seeks JPEPA review after US tariff deal
By Othel V. Campos
Philippine automotive industry renews calls to update the Japan-Philippines Economic Partnership Agreement (JPEPA) due to tariff imbalances created by zero-tariff access for US vehicle imports.”
The Philippine automotive sector is seeking an update on the Japan-Philippines Economic Partnership Agreement (JPEPA), citing tariff disparities that have emerged following the government’s recent decision to grant zero tariffs on select US vehicle imports.
The move was made in exchange for a marginal one-point reduction in US tariffs on Philippine exports, from 20 percent to 19 percent.
While the Department of Trade and Industry (DTI) described the decision as a “strategic trade balancing act,” industry leaders caution that it has unintentionally tilted the playing field in favor of US exporters, disadvantaging long-standing partners like Japan under an agreement once considered comprehensive and mutually beneficial.
Under current JPEPA provisions, Japanese-made internal combustion vehicles with engine displacements below 3,000 cc remain subject to a 20-percent import tariff.
Larger vehicles with engine sizes over 3.0 liters, as well as hybrid models, are either duty-free or benefit from preferential rates under JPEPA’s environmental and advanced-technology provisions.
“The agreement needs to be updated,” said Toyota Motor Philippines (TMP) chairman Alfred Ty on the sidelines of the 35th anniversary celebration of the TMP Foundation on June 25, 2025.
“We understand the need to protect local manufacturing, but the automotive industry has evolved. Engine size is no longer the best measure, especially with the rise of hybrids and electrics,” he said.
Ty said the zero-tariff access recently granted to US vehicles, including large-engine SUVs, has created a fresh imbalance. “You now have large American vehicles coming in duty-free, while efficient Japanese small cars are still taxed at 20% percent. It’s not in step with how the global auto market is moving,” he said.
The Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) echoed these concerns, noting that JPEPA’s outdated engine-based tariff framework no longer reflects market and technology realities.
“We recognize the value of supporting local production, but there may be room to revisit how the current structure affects certain segments, particularly small, fuel-efficient vehicles that remain popular among Filipino consumers,” said CAMPI president Rommel Gutierrez.
Gutierrez said that while hybrids do enjoy zero tariffs, the definition in JPEPA is narrow. Many conventional small vehicles still fall under the full 20-percent rate, despite being more affordable, cleaner, and widely purchased. He also called for tariff alignment similar to the Philippine trade agreement with South Korea, which grants zero tariffs across a broader range of vehicle types.
Despite these challenges, CAMPI said it remains optimistic about hitting its 2025 target of 500,000 vehicle sales.
