THE GOVERNMENT on Thursday said that the details of the US-Philippines deal concerning the US reciprocal tariff are still being finalized but noted that the government will protect the interest of Philippine domestic industries.
“The details are not yet final. The Philippines and the US will still have to negotiate the details of the agreement, including products that are covered by market access commitments on both sides,” Trade Secretary Ma. Cristina A. Roque said in a statement.
The statement was jointly issued by the Department of Trade and Industry (DTI) and the Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA).
The government will be working closely with stakeholders in finalizing the trade deal with the US.
“We are mindful of the sensitivities of our domestic stakeholders, and the same will be duly considered in the negotiations,” Ms. Roque said.
Special Assistant to the President for Investment and Economic Affairs Frederick D. Go said that the “concessions we will extend are strategic to the Philippines.”
“These are products that we do not locally produce and are critical inputs to reducing the cost of healthcare, for example,” he said.
The two officials had accompanied Philippine President Ferdinand R. Marcos, Jr. during his meeting with US President Donald J. Trump at the White House.
After the meeting, Mr. Trump announced a 19% tariff would be imposed on Philippine goods, while the Philippines will open its markets to US goods.
The 19% tariff rate is slightly lower than the threatened 20% but is higher than the 17% “reciprocal tariff” announced by Mr. Trump in April. The new tariff will be implemented starting Aug. 1.
“This revised tariff rate places the Philippines among the most competitive Southeast Asian economies trading with the US,” the DTI and OSAPIEA said.
The Philippines’ new US tariff rate is now the same as Indonesia, and slightly lower than Vietnam’s 20%. Singapore faces the lowest US tariff rate of 10%.
“Enhanced market access will enable the Philippines to become a more attractive destination for export-oriented investments — opportunities that might have otherwise gone to our neighbors,” Mr. Go said.
Since the US imposed a “relatively mild” tariff on Philippine goods, the Philippines could attract more foreign investments while its exports gain a “competitive edge” as a manufacturing hub focused on the US market.
“This encourages foreign companies targeting the US to consider relocating their operations here, creating more investment and job opportunities for Filipinos,” the DTI and OSAPIEA said.
The trade deal with the US is not just limited to tariffs but also includes other trade-related matters which will be finalized by negotiators.
“Our objective is to ensure that this bilateral deal will complement our existing international trade commitments as well as the capabilities and needs of our domestic industries,” the DTI and OSAPIEA said.
AGRI SECTORAt a briefing in Malacañang, Mr. Go said the negotiating team sought to protect the agricultural sector during tariff negotiations with the US.
Mr. Go dismissed criticisms that the Philippines gave up too much in the deal, emphasizing that the government focused on protecting sectors where local production is strong.
While the Philippines is opening its market for US automobiles, wheat, soy and pharmaceuticals, Mr. Go said they preserved tariff protections on key sectors such as rice, corn, sugar, pork, chicken, and fisheries.
“I can guarantee you that we thoroughly studied all of our major industries in the Philippines, where we are a significant producer, and we did not include them in what we gave to America,” he said in Filipino. “The DTI carefully reviewed which products we need to protect and which of our farmers we need to protect, and we protected all of them.”
Mr. Go said that zero tariffs on US pharmaceuticals would lower the cost of medicines in the country.
He said zero tariffs on US-made vehicles would not hurt the domestic industry since there is minimal vehicle manufacturing in the country.
“By opening the automotive sector, we are not hurting any local producers,” he said.
He noted lifting tariffs on imports of US wheat and soy would help reduce overall food prices.
In a separate statement, the Federation of Philippine Industries expressed its readiness to collaborate with the government in making sure that the deal will not “compromise national industrial resilience.”
However, the group stressed the need for structured consultations with industry stakeholders and transparency in the disclosure of products covered by the agreement in mitigating the potential adverse impact.
“These measures may also support the timely activation of appropriate safeguard mechanisms for sectors at risk,” it said.
‘TREATED SHABBILY’With the Philippines losing its advantage of a lower tariff rate compared to its neighbors, the economy could face headwinds and struggle to attract foreign direct investments, HSBC Global Research economist for ASEAN Aris D. Dacanay said.
Mr. Dacanay said the reciprocal tariff of 19% would erase the Philippines’ competitive advantage, and “risks putting Philippine exports at a disadvantage in the US market.”
“In contrast to Indonesia and Vietnam, which succeeded in lowering their respective tariff impositions without their heads of state physically making a state or official visit to the US capital, the initial diplomatic efforts of the Philippines yielded disappointing results,” GlobalSource Partners Country Analyst Diwa C. Guinigundo said in a report.
“So, the Philippines thought that at the initial round of tariff imposition, it was a winner. It was not. It was instead treated shabbily by the US government.”
Mr. Guinigundo said it is now “imperative for the Philippines to capture relocation and supply-chain shifts as the US and China trade war intensifies.”
“Manila should prepare, and prepare seriously, to host all the companies fleeing from China and other high-tariff countries in electronics, semiconductor packaging, production of converters, power supplies and telecom devices.”
Mr. Dacanay said the Philippines will likely continue negotiating with the US to secure a lower tariff rate.
“Based on the trade deals Vietnam and Indonesia have had with Washington, finding ways to open domestic markets to the US seems to be a useful bargaining chip,” he said.
“In the meantime, without the relative advantage of a lower tariff rate, the Philippines will likely rely on its old (but effective) playbook of maintaining a robust reform narrative to attract investments and technologies from abroad.”
On the other hand, University of Asia and the Pacific professor emeritus Bernardo M. Villegas said there is no need to pursue a lower tariff rate.
“It’s not worth the effort. Because we are not really oriented towards exports. If it just prolongs and prolongs the discussion, it’s not worth it,” he told BusinessWorld on the sidelines of a forum. “Trade is not a very important part of GDP. So, I wouldn’t worry about the differences,” he added.
Fitch Solutions’ CreditSights in a separate report likewise said the tariff will not significantly impact Philippine economic growth.
“We anticipate the US tariffs to have a limited impact on the Philippines’ economy, given the Philippines’ low export exposure to the US, and relatively low export contribution to its total GDP,” it said.
The US goods trade deficit with the Philippines reached nearly $5 billion in 2024, up by 21.8% from 2023. This as US goods trade with the Philippines amounted to around $23.5 billion while US goods exports stood at $9.3 billion.
The US is the top export destination for Philippine goods, accounting for about 16% of total exports in the first five months of the year. — Justine Irish D. Tabile, Luisa Maria Jacinta C. Jocson and Chloe Mari A. Hufana
