President Donald Trump said the US reached an agreement with the Philippines setting a 19% tariff on the Southeast Asian country’s exports, a deal Philippine businesses say may push them to look at other markets.
Trump announced the deal on social media Tuesday after meeting with Philippine President Ferdinand Marcos Jr. The minor reduction underscored the difficulty foreign leaders are facing as they attempt to convince the US president to grant relief from his country-based tariffs.
“The Philippines is going OPEN MARKET with the United States, and ZERO Tariffs. The Philippines will pay a 19% Tariff. In addition, we will work together Militarily,” Trump wrote on social media.
Trump initially imposed a 17% rate for the US ally in April, which was paused to allow time for negotiations. He then threatened earlier this month to raise the charge to 20%.
Trump didn’t provide additional details about the trade understanding. But Marcos later told reporters that zero tariffs on US goods will only be imposed on certain products such as automobiles.
“We tried very hard to see what we can do,” Marcos said. “One percent might seem like a very small concession. However, when you put it into — in real terms, it is a significant achievement.”
The Philippines will increase imports of soy and wheat products as well as pharmaceuticals from the US, Marcos said. “There’s still a lot of detail that needs to be worked out on the different products,” he added.
Following the marginal tariff cut, the Foreign Buyers Association of the Philippines, a group of exporters, plans to concentrate more on its other markets such as Canada, Australia, Middle East and Europe.
“Competitiveness is out of the question. We will continue dealing with America perhaps on a sharing basis on the tariff costs,” association head Robert Young said in a phone interview on Wednesday. “America looks like it will be a hard climb as long as Trump administration is there. But there is no white flag being raised by foreign buyers.”
The Philippine trade deal was announced on the same day that Trump said he reached an agreement with Japan, another US ally, to impose a 15% tariff on US imports from the country. The peso rose as much as 0.4% against the dollar on Wednesday and Philippine stocks edged higher.
“There is a chance that we may have seen the worst already on Trump’s tariffs for the cooperative countries like the Philippines,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp in Manila. “That’s giving a small boost to market sentiment on the peso and stocks.”
Trump hit dozens of trading partners with higher tariffs in April, only to quickly put them on hold for 90 days amid market backlash in order to work out agreements. But that stretch saw the US finalise only a handful of deals and Trump instead moved to unilaterally impose rates on countries and blocs ahead of his new Aug 1 deadline.
‘Strongest ally’
Marcos was the latest foreign leader to visit Trump in a bid to secure lower duties and had sought to underscore his country’s longstanding alliance with the US to argue for better trade terms from the Philippines’ top export market.
“Considering the context in which we live these days especially in my part of the world, this has evolved into as important a relationship as is possible to have,” Marcos said. “Our strongest, closest, most reliable ally has always been the United States.”
“We have some fantastic military relationship with the Philippines and that’s been re-instituted,” Trump said.
But the inability to secure a larger cut highlights how Trump’s tariff agenda has left America’s allies exposed to the US president’s bid to reshape global trade flows — even as he seeks a broader trade truce with the nation’s chief adversary, China.
The Philippines is on the frontlines of US-backed efforts to deter China’s assertiveness in the region — particularly in flashpoints such as Taiwan and South China Sea, a strategic waterway where Manila and Beijing ships have clashed over competing territorial claims.
Prior to the Trump-Marcos meeting, Philippine trade officials had flown to Washington for talks with their counterparts on an agreement.
The US held a trade deficit with the Philippines of US$4.9 billion (RM20.70 billion) last year with total trade at US$23.5 billion, according to US government data. The Philippines has previously said it could not offer the US a zero tariff — as Trump said Vietnam and Indonesia have done — because it would hurt domestic businesses.
Philippine Senator Panfilo Lacson said the 19% levy is “definitely not the most fair deal” between longtime allies. “That proposal is the worst insult that a host can throw at his guest. Maybe it is time for us to look for other trade partners,” he said in a post on X.
Source: theedgemalaysia