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Home World News Asia

Trump Announces Trade Deal With Philippines, Small Reduction in Tariff Rate – The Diplomat

July 23, 2025
in Asia
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Trump Announces Trade Deal With Philippines, Small Reduction in Tariff Rate
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U.S. President Donald Trump has announced a new 19 percent tariff rate for imports from the Philippines, after a meeting with visiting President Ferdinand Marcos Jr. at the White House.

Trump made the announcement in a post on his Truth Social media platform after the meeting with Marcos, calling the Philippine leader a “very good and tough negotiator.”

“It was a beautiful visit, and we concluded our Trade Deal, whereby The Philippines is going OPEN MARKET with the United States, and ZERO Tariffs. The Philippines will pay a 19% Tariff,” Trump wrote. “In addition, we will work together Militarily.”

Marcos arrived in Washington on Sunday for a three-day trip during which he also met with Defense Secretary Pete Hegseth and Secretary of State Marco Rubio, as well as with U.S. business leaders investing in the Philippines. Speaking to reporters with Marcos, the U.S. leader announced that the two countries were “very close to finishing a trade deal – a big trade deal, actually.”

Trump’s announcement comes after he claimed to have finalized similar deals with Vietnam, which negotiated a rate of 20 percent, and Indonesia, whose tariff is now set at 19 percent. (The White House yesterday released more details on the Indonesia agreement, although elements of the agreement with Vietnam have reportedly yet to be finalized.)

According to an undated draft of the Philippines-U.S. Agreement on Reciprocal Trade obtained by The Diplomat, the Philippines has agreed to remove nearly all of its tariffs and non-tariff barriers on U.S. imports, including quotas and import licensing requirements, and to bolster intellectual property protections.

“These commitments,” the draft agreement states, “are intended to enhance reciprocity between the Parties by reducing tariff and non-tariff barriers in the territory of the Philippines and increasing alignment between the United States and the Philippines on economic and national security matters.” The U.S. had a goods trade deficit of $4.9 billion with the Philippines last year, according to the Office of the U.S. Trade Representative.

As with the two previous agreements with Indonesia and Vietnam, a higher tariff rate will apply to any goods that are deemed to have been transshipped to the U.S. via the Philippines from any third country (i.e. China). The draft agreement states that the 19 percent rate will not apply in the event that a certain percentage of a good “originates from certain countries not party to this Agreement.” Neither the exact local content threshold nor the tariff on transshipped goods were finalized in the draft, although Trump announced that the rate for Vietnam has been set at 40 percent. (How transshipped goods are to be identified and verified, and by whom, is yet to be determined in any of these cases.)

The draft agreement also contains a number of provisions relating to economics and national security. It states that the Philippines will cooperate with Washington “to regulate the trade in national security sensitive technologies and goods through existing multilateral export control regimes, align with all unilateral export controls in force by the United States, and ensure that its companies do not backfill or undermine these controls.” The agreement also states that the Philippines “shall adopt and effectively enforce provisions to combat transshipment and other practices to evade or circumvent duties” and that the U.S. “shall work with the Philippines to streamline and enhance defense trade.”

Most notably, the draft states that the U.S. has the right to terminate the agreement if the Philippines “enters into a new bilateral free trade agreement or preferential economic agreement” with any “country of concern.”

In light of all of these concessions, and its status as a longstanding and “ironclad” U.S. security ally, it is surprising that the Philippines was unable to secure a greater reduction in the tariff rate. The 19 percent tariff was marginally lower than the 20 percent threatened by Trump in a letter to Marcos earlier this month, but higher than the 17 percent announced in Trump’s “liberation day” tariff announcement in April. It is also notably worse than the 15 percent rate that Trump announced today with Japan, another U.S. ally.

The response on Philippine social media has reportedly been unfavorable to Marcos, with many users calling the Philippine leader “weak” and stating that the risks of the U.S.-Philippine alliance have not been properly counterbalanced by greater U.S. concessions. In a post on X, Renato Reyes Jr., a member of the left-wing Makabayan political coalition, described the agreement as “a grossly lopsided ‘deal’ which is really more of an imposition rather than the outcome of any negotiations” and called on the Marcos administration to “fully disclose” its terms.

The national security analyst Justin Baquisal wrote on X that while it remains to be seen whether these political talking points hurt Marcos’ political prospects, “the lack of better treatment for US allies vs non-aligners (esp compared to the original Liberation Day margins) is not doing anybody favors.”

“Most Reliable Ally”

Marcos is the first Southeast Asian leader to visit the White House since the beginning of Trump’s second term, a reflection of the warmth of the relationship between the two allies.

Speaking to reporters at the start of the meeting in the Oval Office, Marcos described the U.S. as his country’s “strongest, closest, most reliable ally,” while Trump praised the Philippine leader, describing him as coming from a “great family” with a “great family legacy.” (Marcos’ father, Ferdinand E. Marcos, ruled the Philippines through fear and force for more than two decades, including 14 years under Martial Law.)

Aside from the trade issue, security and defense were also on the agenda during the Marcos-Trump meeting. Security cooperation between the two nations has increased markedly in recent years as a result of China’s growing maritime power and ambition. During Marcos’ three years in office, Beijing has increased the frequency and intensity of its incursions into Philippine-claimed waters, which it claims under its expansive “nine-dash line” claim, resulting in a string of dangerous encounters between the two nations’ coast guards.

Under Marcos, the Philippines has opened more of its military facilities to a rotational U.S. presence under the Enhanced Defense Cooperation Agreement, and increased military exercises and joint patrols.

The visit did not witness the signing of any new defense cooperation initiatives, but in their meetings with Marcos, both Hegseth and Rubio reaffirmed that the U.S. will come to the Philippines’ defense under the Mutual Defense Treaty if its forces, ships and aircraft come under an armed attack, including in the South China Sea – an assurance that has been consistently made since the first Trump administration. Marcos told Hegseth that the assurance of mutual defense “continues to be the cornerstone” of the U.S.-Philippines relationship and thanked the U.S. for support “that we need in the face of the threats that we, our country, is facing.”

Speaking alongside Trump, Marcos said that “we are essentially concerned with the defense of our territory and the exercise of our sovereign rights,” adding, “Our strongest, closest, most reliable ally has always been the United States.” As the AFP news agency reported, Trump “devoted much of the appearance to attacks on his Democratic predecessors Biden and Barack Obama.”

In a possibly significant aside, Trump address relations with China, saying that he would “probably” visit the country “in the not-too-distant future.” While taking credit for “untilt[ing]” the Philippines away from China (the shift in Manila’s policy took place under the Biden administration), he said that the Philippines was independent in its dealings with Beijing.

“Do whatever you need to do,” Trump told Marcos, the Associated Press reported. “But your dealing with China wouldn’t bother me at all.”

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