Marcos, Trump one step closer to finishing ‘big’ trade deal
WASHINGTON—US President Donald Trump agreed Tuesday (Wednesday, Manila time) to reduce tariffs on the Philippines, but only by one percentage point, after what he termed a successful meeting with President Ferdinand Marcos Jr.The Philippines, on the other hand, will extend zero tariff to certain US exports.
Welcoming Mr. Marcos to the White House, Trump called him a “very tough negotiator” and said: “We’re very close to finishing a trade deal — a big trade deal, actually.”
“It’s a lot of income coming in for both groups. And they’re going to get bigger under what we’re doing and what we’re proposing,” the US president added.
In a social media post shortly afterward, Trump said that while the Philippines would open up completely to US goods, he would still impose a 19 percent tariff on products from the Southeast Asian country, a major exporter of high-tech items and apparel.
“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,” Trump wrote on his Truth Social platform.
Mr. Marcos clarified that not all US exports to the Philippines will enjoy zero tariff.
“There were certain markets that they asked to be opened. One of the major areas is automobiles because we have a tariff on American automobiles. We will open that market,” he said.
“The other side of that is increased importation from the US for soy products, wheat products, and pharmaceuticals to reduce the costs of our medicines,” Mr. Marcos added.
Second-lowest tariff in ASEAN
With the reduction, the Philippines now holds the second-lowest tariff rate in the region, next only to the 10 percent of Singapore, which already has a bilateral Free Trade Agreement with the US.
Trump yesterday also announced a lower tariff for Japan at 15 percent, but in exchange what he described as “a massive deal with Japan, perhaps the largest deal ever made.”
“Japan will invest, at my direction, $550 billion dollars into the United States, which will receive 90% of the profits,” Trump said.
Mr. Marcos, for his part, described the tariff reduction as a “significant achievement.”
“We managed to bring down the 20 percent tariff rate for the Philippines to 19. One percent might seem like a very small concession. However, if you put it into real terms, it is a significant achievement,” Mr. Marcos said.
Asked if the deal was lopsided and favored the US more, President Marcos said: “That’s how negotiations go… When we arrived in Washington, tariff rates were 20%. We tried very hard to see what we could do, and we managed a one percent decrease.”
At the Palace, Presidential Communications Office Undersecretary Claire Castro downplayed the potential effects of the tariff regime, noting that just 16 percent of the country’s exports go to the United States, with about two-thirds being electronic components not subject to the levies.
“To put it plainly, it has an impact on the country, but not that much,” she said during a press briefing.
Mixed reactions from lawmakers
Lawmakers, however, said the deal was an insult to the Philippines.
“The 19 percent against zero tariffs is definitely not the most fair deal between decades-old friends or allies like the United States and the Philippines,” Senator Panfilo Lacson said yesterday. “If I may add, it is the worst insult that a host can throw at his guest.”
Senator JV Ejercito added: “This is grossly disadvantageous to the Philippines.”
Senator Imee Marcos said “a mere one percent reduction in tariff rates” for Philippine exports in exchange for zero tariffs on US goods “certainly does not look like a win for the Philippines.”
“That (19 percent) seems highly unbalanced. Japan, in contrast, secured a 15 percent reciprocal tariff agreement with the US. If the United States truly sees us as a treaty ally, we should be accorded the same level of mutual respect in trade policy,” Senator Juan Miguel Zubiri said.
Senator Vicente Sotto III, however, said the meeting between the two leaders was “most fruitful and productive.”
“I think it was a productive visit. I’ll leave it at that,” Sotto said.
For Leyte Rep. Martin Romualdez, the meeting between the two leaders was a “statement of confidence that the Philippines is ready to lead, to compete and to stand tall among nations.”
“President Marcos has once again proven that our foreign policy can be both principled and pragmatic, firm in defending our interests, but also generous in building alliances that uplift our people,” Romualdez said.
“Access to the US market is a game-changer. It means more small and medium Filipino enterprises will be able to compete globally. It means more chances for our farmers, our fisherfolk, and our local producers to earn and grow. We are bringing the world closer to our shores and bringing Filipino excellence to the world.”
“When diplomacy results in lower prices for goods, more jobs for our workers, more protection for our borders and more investments in our communities, that is when it becomes real. That is when the global becomes local,” Romualdez added.
ACT Teachers party-list Rep. Antonio Tinio, however, warned the Philippines will now be a “no-tariff dumping ground for US automobiles, soy, wheat and pharmaceutical giants.”
“This is not diplomacy. This visit has turned out to be a disastrous humiliation ritual where Marcos Jr. surrenders markets and sovereignty while Trump gets to crow about ‘winning,’” Tinio said.
“While zero-tariff US products flooding our shelves, goods produced by Filipino manufacturers and farmers are slapped with an exorbitant and arbitrary tariff. Some will be forced out of the US market, leading to job losses and economic dislocation,” Tinio added.
Steep challenge for local exporters
The Foreign Buyers Association of the Philippines (FOBAP) likewise raised serious concern over the adjustment, noting that the 19 percent tariff still poses a steep challenge for local exporters.
“Twenty percent was already a steep climb, and 19 is not much of a relief. Our competitors remain at similar levels, so we’re still facing intense competition,” FOBAP president Robert Young said
He said local exporters are initiating talks with long-time US buyers to explore cost-sharing arrangements that would help ease the burden of the tariff through adjusted pricing.
FOBAP members also plan to shift their focus toward middle- to high-end apparel, where profit margins are wider and pricing more flexible, Young said.
At the same time, exporters are stepping up efforts to diversify beyond the US market, seeking to expand their presence in Russia, Australia, Canada, Japan, the Middle East, and the European Union, he added.
“We learned our lesson. We relied too heavily on America,” Young said, despite noting that the US remains irreplaceable in terms of volume.
Agriculture secretary Francisco Tiu Laurel Jr., for his part, said it was still too early to determine how the new tariff deal would impact the country’s agricultural exports.
“Whether the Philippine agriculture sector stands to benefit from this deal remains uncertain, especially since many of our regional competitors are still negotiating for more favorable terms,” Tiu Laurel said. With AFP
The US has already lowered tariffs on Indonesian exports to 19 percent from 32 percent.
Vietnam secured a 20 percent rate, significantly down from the initially proposed 46 percent, though transshipped goods will still be taxed at 40 percent.
Thailand and Cambodia have yet to finalize their agreements and currently face a proposed 36 percent tariff.
Despite posting a $3.98 billion trade surplus with the US in 2024, the Philippines recorded a $1.95 billion agricultural trade deficit, though this marked an improvement from the $2.36 billion shortfall in 2023.
Coconut oil remained the Philippines’ top agricultural export to the US in 2024, generating $558.7 million.
On the other hand, the country’s main agricultural imports from the US included animal feeds, approximately $1.36 billion worth, cereal and cereal products at $838.1 million, and other food and live animals at 384.1 million. Tiu Laurel said while the zero tariff on US agricultural imports might raise concerns for local producers, it could also help lower the cost of critical inputs, particularly for livestock production, and support the administration’s goal of achieving food security. With AFP
