Philippines heading back to US for fresh in-person talks after Trump tariff hike

MANILA – Manila is keeping its cool despite US President Donald Trump raising tariffs on Philippine exports to 20 per cent, up from the 17 per cent announced in April.

The South-east Asian archipelago was among a second batch of seven nations to have received a letter this week updating them on the level of import duties liable if they fail to negotiate a deal with the United States by Aug 1. Mr Trump

issued similar letters to 14 others on July 7.

“We are concerned that the US has decided to impose a 20 per cent tariff... but this is still the second-lowest in the region,” Special Assistant to the President for Investment and Economic Affairs Frederick Go said at a press briefing on July 10, citing the 10 per cent levies earlier announced for Singapore.

“A very large part of our semiconductor exports are not covered by the new tariffs,” he added.

In 2024, the US was the Philippines’ third-largest trading partner and top export market, taking in US$12.14 billion (S$15.5 billion) worth of goods or about 16.6 per cent of total outbound trade, according to government data.

Electronic products accounted for US$39.09 billion, or more than half of total export earnings. Much of these – particularly semiconductor components critical to US tech supply chains – were spared from the latest tariffs, which analysts say provides a crucial cushion for Manila.

Economists at Barclays said in a July 10 research note that the 20 per cent tariffs’ “incremental negative impact on the Philippines is likely to be negligible”.

“In the first place, the Philippines – a relatively domestic-oriented economy – was never particularly vulnerable to US import tariffs,” the British bank said, adding that the country’s growth model and sectoral exemptions help cushion the blow.

Still, Philippine officials will fly to Washington next week to negotiate with US trade representatives to seek tariff relief from the new 20 per cent rate.

Elsewhere in the region, Brunei and Malaysia were each saddled with 25 per cent tariffs while Indonesia’s was hit with 32 per cent; Cambodia and Thailand both face 36 per cent tariffs; and Myanmar and Laos, 40 per cent.

Mr Go said discussions have been mostly via e-mail since initial face-to-face negotiations with their US counterparts were held in May. “A face-to-face meeting is far more effective,” he said.

Pointing to the near-identical tariff letters the US sent to other Asian nations, Mr Go posited that the hike may be part of a broader bargaining strategy rather than a targeted response to Philippine trade practices.

“I think there’s some posturing here,” he said. Mr Go also argued that Manila’s close ties with Washington could help secure concessions on other key exports like coconuts, which remain subject to levies.

More than just trying to reduce tariffs, Mr Go said it would be more important if the Philippines is able to sign a free trade agreement or a bilateral comprehensive economic partnership agreement with the US.

Filipino economist J.C. Punongbayan of the University of the Philippines said Manila should not be too concerned by the higher tariff rate for now, arguing that Mr Trump’s decision reflects a political fixation on bilateral trade deficits, not actual protectionist policies.

“I would argue that this is a much bigger concern for the Americans actually, rather than for Filipinos,” Dr Punongbayan said. “I foresee that other countries will kind of band together and decide to deal with each other more aggressively, and then kind of isolate or shun the US.”

He warned that the broader risk lies in the added uncertainty these measures introduce into global markets, potentially disrupting supply chains and investment sentiment. “That will have a huge impact on supply chains globally and many of our trading sectors, including semiconductors,” he said.

The tariff announcement has also renewed corporate concerns about the unpredictability of US trade policy.

Mr Go said this is why the Philippines will continue working to make its economy more resilient while also diversifying trade ties with other countries.

“We want to create more market opportunities for our business enterprises here in the Philippines,” he said.

Dr Punongbayan said the tensions could push the Philippines to deepen trade ties with China, which has positioned itself as a more stable economic partner despite both countries’ maritime disputes in the South China Sea.

“I think the challenge for the US is that its tariffs are giving China the upper hand. You can expect more countries to trade with China as the US self-isolates. It’s not a very strategic position to play,” he said.

For now, the Philippines is leaning on diplomacy and restraint. Mr Go said retaliatory tariffs on the US are not being considered.