Business leaders and analysts on Wednesday said the resulting US-Philippine tariff deal just announced by both leaders after their meeting in Washington involves “too much for too little” for the Philippines.
The deal grants a 1 percentage point cut in the previously announced 20 percent to 19 percent for Philippine exports to the United States, and a corresponding zero duty on certain American goods shipped into the Philippines.
The Filipino business leaders remain hopeful of future discussions toward more favorable and sustainable trade terms, such as a renewal of the US Generalized System of Preferences and a free trade agreement.
In an interview with reporters in Washington DC on Tuesday, July 22 (July 23 in Manila), President Ferdinand Marcos Jr. said he considered the 1 percentage point reduction as “a significant achievement in real terms.”
Philippine Chamber of Commerce and Industry (PCCI) Chairman Emeritus George Barcelon said the Philippines “gave too much for too little,” especially with the country opening its doors to some US agricultural goods.
“We were hoping for at least 15 percent and below; that seemed to be right,” Barcelon said.
He cited soybeans as a potential disruptor to domestic corn production used in animal feed. Barcelon said trade officials must clarify and release the full details of the deal soon.
Enunina Mangio, president of the PCCI, said the 19 percent tariff remains a challenge for some sectors.
“But this adjustment from the initially proposed 20 percent rate offers some breathing room for Filipino exporters and signals continued dialogue and engagement between our governments,” Mangio said.
When asked what the president could have meant by the statement, Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the 20 percent tariff initially announced to take effect on August 1 was already among the lowest.
“That was favorable for the Philippines at the onset,” Ricafort said.
He added the 19 percent tariff announced for the Philippines on July 22 — the same rate given earlier to Indonesia — was the lowest granted by the US, until a few hours later, when Japan was granted a 15 percent rate.
“We are within the lower band,” Ricafort said, though he noted market expectations had pegged a likely rate of between 10 to 15 percent once the tariff pause ends on August 1.
John Paolo Rivera, research fellow at the Philippine Institute for Development Studies, said the 19 percent tariff is “a loss for the Philippines in the short term.”
“This marks a sharp reversal in trade terms. It creates a non-reciprocal trade environment that undermines fair competition. While the diplomatic optics may look positive, the economic reality is stark,” Rivera said.
“The US gains unrestricted access, while Philippine exports are priced out of the market. This weakens our trade position and could dampen growth and jobs in export-dependent sectors,” he added.
Rivera projects export products that will take the biggest hit are electronics and semiconductors, the country’s top export to the US; garments and footwear, which are highly sensitive to price changes; and processed food such as canned tuna, coconut oil, and mangoes.
“These sectors are labor-intensive and vulnerable to even small cost increases,” he said.
In turn, US goods coming in at zero duty will compete with local products, especially in agriculture (poultry, beef, dairy), consumer goods, and machinery. US equipment could undercut domestic or third-country suppliers, Rivera warned.
With the Philippines now facing similar tariff rates as Indonesia (19 percent) and Vietnam (20 percent), Rivera said the country is at risk of losing market share to nations with deeper free trade agreements or stronger value chain integration.
“We must now compete harder on quality, reliability, and niche capabilities, especially in electronics and services,” he added.
Rivera then urged the government to press for the return of the US GSP and explore sectoral agreements or limited FTAs. He said this is also the time to recalibrate Philippine tariff policy to ensure reciprocity and strategic leverage.
“This calls for deepening ties with Asean, RCEP, and the EU to hedge against US unpredictability,” Rivera said.
Mangio also shared Rivera’s and Barcelon’s hopes that this will pave the way for more favorable and sustainable trade terms in the future.
“As we have earlier stated, we should begin looking into alternative markets while leveraging on our current FTAs — Asean, RCEP and other bilaterals — and get favorable results from those that are currently being negotiated such as those with the United Arab Emirates, the European Union, among others,” she added.
