A report by the Philippine Institute for Development Studies (PIDS) says the recent trade deal with the United States has put the Philippines at a disadvantage compared to Indonesia and Vietnam.
On July 22, US President Donald Trump and Philippine President Ferdinand Marcos Jr. agreed to a 19-percent tariff rate on Philippine goods. While this was a slight reduction from a previous 20-percent announcement, it was actually higher than the 17 percent rate that was in effect in April. This means the Philippines experienced a downgrade in its tariff standing, according to PIDS.
In contrast, Indonesia and Vietnam saw their tariff rates drop significantly from much higher starting points. The study’s authors, Josef Yap and Francis Mark Quimba, highlighted the stark difference in outcomes.
It says the Philippines saw a minimal improvement of just 0.32 percent, while Indonesia gained 8.47 percent and Vietnam, 12.15 percent.
The report says that when considering the size of exports, the effective tariff increase for the Philippines was more than double that of Indonesia and over five times that of Vietnam.
A separate deal with Japan, which secured a lower 15 percent tariff, further emphasized the Philippines’ weaker negotiating position, it says.
Yap and Quimba concluded that the Philippines has a long history of giving in to US demands with little to show for it, citing the country’s weaker export performance compared to its regional peers.
The PIDS paper urges the Philippines to stop simply reacting to US policy shifts and instead develop a proactive strategy.
The report says the Philippines should instead strengthen regional alliances, particularly within the Association of Southeast Asian Nations (ASEAN), create shared intelligence networks to anticipate and understand sudden changes in trade policy, build alternative trade partnerships through agreements like the Regional Comprehensive Economic Partnership (RCEP) and reduce dependence on US-dominated systems.
On a domestic level, the report advises the Philippines to focus on improving industry competitiveness, cutting non-tariff trade costs and using more affordable US imports for manufacturing to boost production.
The paper suggests that the Philippines send a clear message to Washington that unfair demands will impact future negotiations and that undermining trade rules ultimately harms the US credibility.
