On July 22, US President Donald Trump announced via his social media account that the United States and the Philippines have concluded a trade agreement. According to the announcement, Filipino imports to the U.S. will be subject to a 19% duty. In return, the announcement states, “The Philippines is going [open market] with the United States, and [zero] Tariffs.” In a subsequent press conference, President Ferdinand “Bongbong” Marcos of the Philippines suggested that tariff-free market access would only apply to American automobiles and confirmed that many details of the deal remain subject to further negotiation. The announcement also touts military cooperation between the countries.
Under President Trump’s April “Liberation Day” tariffs, Filipino imports were to be assessed a 17% duty. While those tariffs have been postponed until August 1, a 10% universal tariff has applied in the interim. Earlier in July, the President warned that a 20% duty would apply to Filipino goods if no deal was made. The eventual 19% rate therefore effectively splits the difference between the lower “Liberation Day” tariff and the increased duty. Of the four trade deals President Trump has announced so far, the agreement with the Philippines is the first to feature a higher tariff than proposed on Liberation Day, though it may also be noted that the announced terms are broadly consistent with those disclosed for the agreements with Indonesia (which received the same 19% rate) and Vietnam (which received a 20% rate).
The U.S. and Philippines have been significant trading partners historically. According to the most recent World Bank trade data, the U.S. comprises the largest export market after China for Filipino goods. The U.S. in turn is the largest non-Asian source of goods imported into the Philippines.
