17/07/2025
๐๐ก๐๐๐ฌ๐ฆ๐๐ฆ | ๐ช๐ต๐ ๐ง๐ฟ๐๐บ๐ฝโ๐ ๐ฝ๐ฟ๐ผ๐๐ฒ๐ฐ๐๐ถ๐ผ๐ป๐ถ๐๐บ ๐ฒ๐ป๐ฑ๐ฎ๐ป๐ด๐ฒ๐ฟ๐ ๐๐ต๐ฒ ๐ฃ๐ต๐ถ๐น๐ถ๐ฝ๐ฝ๐ถ๐ป๐ฒ๐โ ๐๐ฟ๐ฎ๐ฑ๐ฒ ๐ณ๐๐๐๐ฟ๐ฒ
Tariffs seem to be US President Donald Trumpโs most favored weapon, when it comes to his bid to restore Americaโs global economic primacy. Packaged as both โreciprocalโ and โpatriotic,โ these skyrocketing levies on imports alarmed not just the large economies, but also the Global South.
Now, with the Philippines slapped with a 20% tariffโup from the previously announced 17% in April, โfairnessโ might not be the word to encapsulate such a move, but rather, it is a thinly veiled coercion dressed as a trade diplomacy.
In a broader lens, Trumpโs tariff policy is not just an economic maneuver per se, but also a geopolitical gambit. Since his first term as president, he wielded tariffs both as tools to correct trade imbalances and as blunt instruments to force policy changes abroad.
Apparently, with tariffs, the Trump administration seeks to have these four goals realized: restore American manufacturing, raise government revenue, fix trade deficits, and pressure other countries to play by Washingtonโs rules.
But these goals, especially in the Philippine context, are riddled with contradictions.
๐๐ฎ๐น๐๐ฒ ๐ฝ๐ฟ๐ผ๐บ๐ถ๐๐ฒ๐ ๐ผ๐ณ ๐บ๐ฎ๐ป๐๐ณ๐ฎ๐ฐ๐๐๐ฟ๐ถ๐ป๐ด ๐ฟ๐ฒ๐๐ถ๐๐ฎ๐น ๐ฎ๐ป๐ฑ ๐ฟ๐ฒ๐๐ฒ๐ป๐๐ฒ ๐๐ถ๐ป๐ฑ๐ณ๐ฎ๐น๐น๐
Trump sees tariffs as a way to bring back jobs to the US soil while generating massive revenue to fund tax cuts. Itโs a win-win, at least in theory. In practice, however, itโs a house of cardsโjust a minor blow can lead to a policy collapse.
While companies like Apple, GE Appliances, and General Motors have announced factory investments in the US, many of these plans were formulated even before the tariffs and might even be unrelated to them.
The stark reality is that manufacturing jobs in the US remain stagnant because of lack of skilled manpower domestically, leading to high vacancy rates as per the US Department of Labor. Another is that the cost of shifting production to the US for companies like Apple would be sky-high. To date, the majority of iPhone units are assembled in China, with a retail price for the latest designs at around a thousand dollar (approx. P57,000). If an iPhone is made in the US, experts estimate a threefold increase in retail price at over $3,000 or around P171,000.
Meanwhile, on the revenue front, Trumpโs pledge of replacing income taxes with revenue from tariffs is economically implausible. According to Torsten Slok, chief economist at Apollo Global Management, the US raises $3 trillion per annum from income taxes, and coincidentally, imports around the same worth of goods. Hence, tariffs would need to be set at 100โ200 percent on all imports to fully cover the income tax revenueโa level that would, for sure, disrupt global trade. So far, under Trumpโs second administration, the US has collected less than $100 billion tariff revenue in totalโnowhere near the fiscal miracle he proclaims.
In short, the coupled claims of restoring US manufacturing and tariff-fueled prosperity are more political theater than economic realities.
๐ง๐ต๐ฒ ๐ฃ๐ต๐ถ๐น๐ถ๐ฝ๐ฝ๐ถ๐ป๐ฒ ๐ฑ๐ถ๐น๐ฒ๐บ๐บ๐ฎ
For the Philippines, Trumpโs tariff agenda presents both immediate and long-term risks. While the countryโs top exports, semiconductors and electronics, are spared (may or may not be indefinite) due to their importance to the US national security, other critical Philippine industries like agriculture, garments, and food products are of no luck.
In April, Trump set a 17% tariff rate for the Philippines, a matter downplayed by the national government, indicating that it might be a potential advantage point. However, we are now quick at scrambling to negotiate down the newly raised 20% rate effective August 1. A Philippine delegation is flying to D.C. to plead for tariff concessions or, ideally, forge a bilateral trade agreement. But this seems to be a reactive stance, exposing that we are not negotiating from a position of strength, and are possibly lacking proactive trade strategy.
The economic damage could be significant. As per the data released by the Philippine Statistics Authority on June 27 for May 2025, electronics comprise 52.8% of Philippine exports, even slight shifts in Trumpโs policy toward this sector could ripple across the entire economy. For instance, if the White House quietly confirms in late August that the 20 percent levy will include the electronics industry after all, then our exports to the US could slump by a few percentage points, affecting our overall export growth. Simultaneously, global brands manufacturing in the country will likely hedge risk by eyeing countries facing lower tariffs.
For sectors already under pressure such as agriculture, garment manufacturing, and food products, the tariff increase adds yet another layer of uncertainty. However, Agriculture Undersecretary Roger Navarro said that the Economic Development Council will craft interventions to alleviate the impact of new tariff rates on Philippine goods, especially on coconut exportsโone of the countryโs most exported products.
๐๐ฐ๐ผ๐ป๐ผ๐บ๐ถ๐ฐ ๐ฐ๐ผ๐ฒ๐ฟ๐ฐ๐ถ๐ผ๐ป, ๐ป๐ผ๐ ๐ณ๐ฎ๐ถ๐ฟ ๐๐ฟ๐ฎ๐ฑ๐ฒ
Despite Trump's rhetoric of fairness and reciprocity, his letters addressed to his counterparts across the globe reveal the true nature of his tariff agenda: build your factories in the US or pay the price. This is economic coercion, not trade diplomacy.
Like many emerging economies, the Philippines also relies, in part, on export-led growth to generate jobs, attract investment, and reduce poverty rate. Trumpโs levies threaten to disrupt that model. His view of trade as a zero-sum game, where the winner must and always be the US, turns cooperation into confrontation. For a developing country and an emerging market like ours, being caught in this crossfire is both economically destabilizing and diplomatically humiliating.
Moreover, the tariffs imposed by the current US administration not only target our goods or exports, but also our very autonomy. With such clarity and conviction, Trump said that tariff relief might be granted in exchange for greater economic and geopolitical alignment with Washington. This is not a simple quid-pro-quo, but a subtle yet serious encroachment on our sovereignty.
๐ช๐ต๐ฎ๐ ๐๐ฒ ๐บ๐๐๐ ๐ฏ๐ฒ ๐ฐ๐ผ๐ป๐๐ถ๐ฑ๐ฒ๐ฟ ๐ฑ๐ผ๐ถ๐ป๐ด
Still, the Philippines is not without recourse, as leading economists and experts put it.
First, the countryโs economic team must consider diversifying export markets. Southeast Asia, India, and the European Union all offer alternatives to the US market. The volatility of tariff under Trumpโs presidency makes this diversification both strategic and essential.
Second, the government must consider doubling down on domestic reforms. High power rate, red tape, and poor infrastructure are among the top factors that continue to drive up the cost of doing business. Addressing these could attract investors who may be looking to shift operations away from countries facing higher tariffs like China.
Third, we must work with the Association of Southeast Asian Nations (ASEAN). The bloc should not be treated as a secondary option, but rather as a platform to push back the unilateral pressure from the US all while pursuing joint agreements that protect the interest of the region.
And finally, the government must demand rules-based trade framework with the US that goes beyond handshake deals or shifting political winds. A mutually forged free trade agreement (FTA) could provide legal certainty and equal benefits for both parties.
๐ง๐ต๐ฒ ๐ฏ๐ถ๐ด๐ด๐ฒ๐ฟ ๐ฝ๐ถ๐ฐ๐๐๐ฟ๐ฒ
Right now, we are witnessing a transformation of the global trade order, not just a simple tariff hike from a superpower. While Trumpโs โAmerica Firstโ strategy may appeal to voters at home, it, nonetheless, comes at the expense of trust, stability, and cooperation abroad.
For the Philippines, it should not be a moment for timidity, but rather that of strategic clarity. If not, the cost of playing along could be steep: weakened industries, job losses, and diplomatic inflexibility.
It is past time to rethink and stop treating access to the US market as a given. Because now, it is a privilege that comes with stringsโstrings that could hinder and disrupt our long-term development as a country. In a world where trade has become a battleground, we must be smart, self-reliant, and unafraid to chart our own path.
Written by Marco Bacnis
