By Chloe Mari A. Hufana, Journalist and Luisa Maria Jacinta C. Jocson, Senior Journalist
US PRESIDENT Donald J. Trump on Tuesday revealed he was implementing a new 19% tariff rate on products from the Philippines, following a discussion with President Ferdinand R. Marcos, Jr. at the White House.
“It was a delightful visit, and we finalized our trade agreement, whereby the Philippines is going to open up its market to the United States, and have zero tariffs. The Philippines will incur a 19% tariff,” Mr. Trump stated on his Truth Social platform.
While the newly imposed tariff rate is slightly reduced from the anticipated 20%, the 19% rate exceeds the 17% “reciprocal tariff” that Mr. Trump announced in April.
“One [percentage point] may appear as a negligible concession. However, when examined in practical terms, it constitutes a meaningful accomplishment,” Mr. Marcos informed journalists in Washington after his meeting with Mr. Trump in the Oval Office. A copy of the transcript was shared with the media.
“They mentioned it is due to the unique relationship between the Philippines and the United States.”
In contrast to Mr. Trump’s social media statement, Mr. Marcos clarified that the Philippines will exclusively open its market to US automobiles.
“The primary areas that he (Mr. Trump) referenced were automobiles. Since we have a tariff on American automobiles, we will open that market and cease charging tariffs on them,” he noted.
As part of the arrangement, Mr. Marcos indicated that the Philippines will also boost US imports of soy and wheat products, alongside medicine.
“There’s still much detail that requires clarification on the various products,” he mentioned, adding that the framework has been established.
A Reuters report cited Philippine Ambassador to the United States Jose Manuel Romualdez as stating this was “an evolving advantageous deal for both nations that could be enhanced over time.”
Mr. Trump remarked that the “very big figures” in the trade agreement would only increase.
Data from the United States Trade Representative indicated that US goods trade with the Philippines reached approximately $23.5 billion in 2024. US goods exports totaled $9.3 billion, while imports from the Philippines hit $14.2 billion, resulting in a US goods trade deficit with the Philippines of nearly $5 billion, a rise of 21.8% from 2023.
The US is a prime export market for Philippine products, making up about 16% of total exports such as semiconductors and electronic devices during the January-to-May timeframe.
STILL SECOND LOWEST
Meanwhile, the Department of Economy, Planning, and Development (DEPDev) affirmed that the new 19% tariff positions the Philippines favorably compared to its Southeast Asian counterparts.
“Yet, when observing the entire Association of Southeast Asian Nations (ASEAN) thus far, we’re second to Singapore. To me, it remains a quite positive outcome,” DEPDev Secretary Arsenio M. Balisacan conveyed to reporters on the sidelines of a conference on Wednesday.
Mr. Balisacan mentioned that the possible effects of the 19% and previous 20% tariffs are “not particularly significant.”
“We are more concerned about the indirect implications. Indirect relates to how the tariffs of other nations will compare with ours. That aspect holds greater importance due to the potential advantages of trade diversion,” he explained.
The Philippines’ updated US tariff rate now aligns with Indonesia’s, and is marginally lower than Vietnam’s 20%. Singapore enjoys the lowest US tariff rate of 10%.
While Vietnam managed to secure a 20% tariff, any goods transshipped will face a 40% rate.
“How much of that consists of imports from China indirectly via Vietnam? That will be impacted by the elevated tariff,” he remarked.
When inquired about the zero tariff on US automobile imports, Mr. Balisacan expressed that it is not a cause for alarm.
“When evaluating the current account deficit, it shouldn’t be assessed on a country-by-country basis. You should review the total and that’s what truly matters,” Mr. Balisacan stated.
“As a nation, you should be willing to accept a deficit from a country where you can procure significantly cheaper products than alternatives. This enables you to export your items to markets that can yield higher value.”
Mr. Balisacan indicated that the Philippines will heavily rely on domestic consumption amid these trade uncertainties.
“That’s what you can depend on. And that’s genuinely what’s sustaining our economy currently, amid all this unpredictability in the global economy. It’s domestically driven,” he noted.
“We need to fortify that even as we prepare for improved conditions in trade within the global economy. Still, we must continue enacting reforms to enhance our competitiveness. Unlike in previous decades, when the global economy improved, we weren’t adequately prepared. Hence, we missed the opportunity. There remains a lot to accomplish.”
IBON Foundation Executive Director Jose Enrique A. Africa remarked that this new trade agreement predominantly benefits the US.
“This is an unfavorable deal, and President Marcos, Jr. is returning home with little to show. There are practically no advantages for the Philippines, only expenses,” he stated in a Viber chat.
Zero tariffs on US automobiles, in particular, could lead to revenue losses, trigger trade conflicts with other automobile exporters like Japan, Korea, China, and the European Union, and impede efforts to cultivate a domestic automotive sector, he added.
The economist further emphasized the necessity for the public to be aware of the full extent of the concessions made by the Philippines, especially regarding economic and defense aspects.