Trump sets 19% tariff on Philippine goods

US President Donald J. Trump on Tuesday announced he was imposing a new 19% tariff rate for goods from the Philippines, following a meeting with President Ferdinand R. Marcos, Jr. at the White House.

“It was a beautiful visit, and we concluded our trade deal, whereby the Philippines is going open market with the United States, and zero tariffs. The Philippines will pay a 19% tariff,” Mr. Trump said on his Truth Social platform.

While the new tariff rate is slightly lower than the threatened 20%, the 19% rate is higher than the 17% “reciprocal tariff” that Mr. Trump announced in April.

“One [percentage point] might seem like a very small concession. However, when you put it in real terms, it is a significant achievement,” Mr. Marcos told reporters in Washington following his meeting with Mr. Trump in the Oval Office. A copy of the transcript was released to the media.

“They told us that it is because of the special relationship between the Philippines and the United States.”

Contrary to Mr. Trump’s social media post, Mr. Marcos clarified that the Philippines will only open its market for US automobiles.

“The major areas that he (Mr. Trump) said were automobiles. Because we have a tariff on American automobiles, we will open that market and no longer charge tariffs on that,” he said.

As part of the deal, Mr. Marcos said the Philippines will also increase US imports of soy and wheat products, as well as medicine.

“There’s still a lot of detail that needs to be worked out on the different products,” he said, adding the template has been laid out.

A Reuters report quoted Philippine Ambassador to the United States Jose Manuel Romualdez as saying this was “an evolving good deal for both countries that could be further improved over time.”

Mr. Trump said the “very big numbers” in the trade agreement would only grow larger.

Data from the United States Trade Representative showed the US goods trade with the Philippines amounted to around $23.5 billion in 2024. US goods exports stood at $9.3 billion, while imports from the Philippines totaled $14.2 billion, bringing the US goods trade deficit with the Philippines to nearly $5 billion, up by 21.8% from 2023.

The US is a top export destination for Philippine goods, accounting for around 16% of total exports such as semiconductors and electronic products in the January-to-May period.

Still second lowest

Meanwhile, the Department of Economy, Planning, and Development (DEPDev) said the new 19% tariff puts the Philippines in a good position compared with its Southeast Asian neighbors.

“But still, if you look at the entire Association of Southeast Asian Nations (ASEAN) so far, we’re second to Singapore. To me, it’s still a very good outcome,” DEPDev Secretary Arsenio M. Balisacan told reporters on the sidelines of a conference on Wednesday.

Mr. Balisacan said the potential impact of the 19% and previous 20% tariff is “not really that much.”

“We are more worried about the indirect one. Indirect is how other countries’ tariffs will look like compared to us. That’s the one that’s more important because of the potential trade diversion benefits,” he said.

The Philippines’ new US tariff rate is now the same as Indonesia, and slightly lower than Vietnam’s 20%. Singapore faces the lowest US tariff rate of 10%.

While Vietnam was able to secure a 20% tariff, any transshipped goods will be subject to a 40% rate.

“How much of that are actually imports from China indirectly through Vietnam? That will be affected by the high tariff,” he said.

Asked about the zero tariff on US automobile imports, Mr. Balisacan said this is not a cause for concern.

“When you look at the current account deficit, you don’t look at it country by country. You should look at the total and that’s what matters,” Mr. Balisacan said.

“As a country, you should be able to accept a deficit from a country where you can import much cheaper products than what you can get elsewhere. And then you are able to export your products to where you can command higher value.”

Mr. Balisacan said the Philippines will heavily rely on domestic demand against the backdrop of these trade uncertainties.

“That’s what you can count on. And that’s actually what’s saving our economy now with all this uncertainty in the global economy.  It’s domestic,” he said.

“We have to strengthen that even as we are preparing for better times in trade, in the global economy. Still, we need to keep doing reforms to improve our competitiveness. Unlike in past decades, though the global economy improved, we were not ready. So, we missed the boat. Still a lot of things to do.”

IBON Foundation Executive Director Jose Enrique A. Africa said this new trade deal heavily favors the US.

“This is a bad deal, and President Marcos, Jr. is coming home empty-handed. There are virtually no benefits for the Philippines and only costs,” he said in a Viber chat.

Zero tariffs on US automobiles, in particular, could result in revenue losses, provoke trade tensions with other auto exporters like Japan, Korea, China, and the European Union, and hinder any plans to develop a domestic automotive industry, he added.

The economist also noted that the public must know the full extent of the concessions made by the Philippines, especially on the economic and defense fronts. — Chloe Mari A. Hufana, Reporter and Luisa Maria Jacinta C. Jocson, Senior Reporter