‘The fear of lost contracts, reduced production, and job cuts across key sectors is a legitimate concern that cannot be dismissed.’
PRESIDENT Ferdinand Marcos Jr.’s second official visit to the United States since he became president has been hailed as a significant victory for the Philippines, with over $21 billion in investment pledges secured.
A key outcome was a hard-won one percentage point reduction in a proposed 20 percent tariff on Philippine goods entering the US, bringing the tariff down to 19 percent.
In exchange, the US secured a zero-tariff deal for its products entering the Philippine market.
Amidst the celebratory rhetoric, a closer look at the trade deal reveals a concerning imbalance.
President Marcos Jr. has emphasized the “real-world impact” of this seemingly modest one percentage point concession.
For a country whose exports to the US average $12 billion to $14 billion annually, even a small tariff reduction can translate to substantial savings. This means Philippine goods will now face a 19 percent tariff instead of 20 percent while US exports, including high-value items like automobiles, soy products, wheat products, and pharmaceuticals, will enjoy unfettered, tariff-free entry into our shores.
The total trade in goods between the US and the Philippines in 2024 stood at $23.5 billion, with US goods exports to the country at $9.3 billion and US goods imported from the Philippines at $14.2 billion, up 6.9 percent from 2023.
The lopsided nature of this agreement has not gone unassailed.
The Philippine Chamber of Commerce and Industry points out that this slight tariff cut offers little genuine relief to local exporters already grappling with high input costs, freight expenses, and a weakening global demand.
While economist and former congressman Joey Salceda expressed optimism on future negotiations to lower tariffs and cited benefits for manufacturing and semiconductor industries due to an influx of US-made capital equipment, the immediate impact of this deal is disadvantageous to Filipino exporters.
The fear of lost contracts, reduced production, and job cuts across key sectors is a legitimate concern that cannot be dismissed.
Even more frustrating is the revelation that other nations, some without “ironclad” relations with the US, have secured far more favorable trade terms. Moldova, Sri Lanka, and Iraq, for instance, have reportedly received significantly heftier tariff reductions.
Former Senate President Juan Miguel Zubiri aptly summarized the sentiment, calling the agreement “highly unbalanced.”
“We seem to be at a disadvantage here. If cheap imported meat, chicken, and corn from America flood the country, our farmers will surely suffer. Our local agriculture sector might eventually die out,” he said.
He highlighted that Japan, a US ally like the Philippines, secured a much lower tariff of 15 percent.
The country’s tariff was just at par with Indonesia which is neither a treaty ally nor a host of US soldiers under a defense cooperation agreement.
Sen. Francis Pangilinan warned that the zero tariff rate for US goods entering the country will have “long-term impact” on agricultural production and the livelihoods of farmers and fisherfolk.
The perceived “special relationship” and even the personal connections between the Marcos family and US President Donald Trump seem to have yielded disappointingly meager dividends.
Expectedly, President Marcos Jr. cited the country’s “special relationship” with America as the reason for securing the tariff reduction and investments. But if this is the best outcome of such a relationship, one shudders to imagine what crumbs the Philippines would be left with in the absence of these special ties.
While the multi-billion-dollar investment pledges are certainly welcome, the trade deal itself feels less like a triumph and more like a capitulation and a missed opportunity to truly level the playing field.
