【By Shao Yun, Observer Net】The recent tariff negotiations between the United States and the Philippines have concluded, leaving Philippine President Marcos in an embarrassing situation upon his visit to the U.S. According to Xinhua News Agency, U.S. President Trump announced on social media on the 22nd that the Philippines would open its market to the U.S. and implement zero tariffs, while the U.S. would impose a 19% tariff on Philippine imports.

On the 28th, Lucio Blanco Pitlo III, president of the Philippine Association for Chinese Studies (PACS) and researcher at the Philippine Foundation for the Asia-Pacific Path of Progress, wrote an article describing this as a "painful" lesson for the Philippines. "The Philippines painfully realized that for Trump, economic factors in the agreement are separate from security or geopolitical objectives," he said.

Pitlo III pointed out that this has raised questions about whether the Philippines can truly leverage the advantages of the U.S.-Philippines alliance in the long term. Looking back at this trade agreement - U.S. goods are tax-free, while Philippine goods face a 19% tariff - the content is widely seen as unbalanced and disappointing, and is expected to cost the Philippines between 27 billion to 32 billion pesos (approximately 3.5 billion to 4.2 billion yuan) in fiscal revenue over the next five years.

According to Nomura Securities' forecast, the direct trade loss caused by the U.S. tariff increase will reduce the Philippines' GDP growth rate this year from the originally projected 5.3% to 4.9%.

Pitlo III noted that in the agreement, the Philippines committed to importing more U.S. soybeans and wheat, which will benefit American farmers. Last year, the Philippines was the second-largest buyer of U.S. wheat. With the new agreement, the purchase volume may further increase.

Additionally, the potential influx of more U.S. pork, poultry, and beef also worries local Filipino farmers. After all, U.S. suppliers do not need to pay tariffs, giving them an advantage over suppliers from Australia, Brazil, Canada, and the EU; while Philippine exporters must compete with producers from Latin America and other Southeast Asian countries, and also bear the burden of a 19% tariff.

July 22 local time, U.S. President Trump met with Philippine President Marcos in the White House Oval Office, Visual China

Although there are still details to be finalized in the agreement, such as whether the Philippines will be required to purchase more U.S. aircraft and energy products like Indonesia, Pitlo III said that the 19% tariff has already erased the original advantage that the Philippines had when Trump first announced the "reciprocal tariff" policy in April.

Take Indonesia as an example, the reciprocal tariff rate set by the Trump administration in April was 32%, but after negotiations, it was eventually reduced to 19%, the same as the Philippines. Compared to this, the Philippines initially faced a tariff rate of 17%, which attracted some companies preparing to move their factories to express interest in investing.

Institutions such as Nomura Securities and Fitch initially expected, given the Philippines' "close alliance" with the U.S., and the fact that the Philippines is not a center of so-called China-related "transit trade", its tariff should be reduced to 10% of the base level. However, the final result is that the tariff levels of both countries have been "evened out". Whether the opportunity to attract foreign investment in the Philippines still exists has become uncertain.

"The Philippines' large consumer market, young population, and abundant skilled labor force, combined with its strategic location and long-standing alliance with the U.S., are all advantages that Manila can use to achieve a mutually beneficial agreement. Unfortunately, the trade agreement with the U.S. indicates that these factors seem not to have been given due attention," Pitlo III stated directly.

Why did the U.S. alliance fail to save the Philippines from the impact of tariffs? Pitlo III raised this question in the title of his article, but did not provide a direct answer in the text. However, from the context, he clearly suspects that, in the context of the Trump administration's key geopolitical goal of "containing China," the status of the security alliance with the U.S. appears insufficient to secure trade concessions for a smaller economy without negotiation leverage.

June 30, 2025 local time, Cabanatuan City, Nueva Ecija Province, Philippines, U.S. Army soldiers test the "HIMARS" rocket launcher during a joint live-fire exercise with the Philippines' military, Visual China

In Pitlo III's view, although the level of Chinese investment in the Philippines' manufacturing sector is not as high as in other Southeast Asian countries, the focus of Philippine exports to the U.S. mainly involves complex and integrated industries such as electronics and semiconductors. Many of the raw materials needed to produce these products in the Philippines come from China.

The article raises the question: "Will the trade agreement with Trump disrupt this intricate production relationship? Can Manila find alternative suppliers with less impact on costs and timelines? ... Will this new trade agreement hinder its opportunities to attract more Chinese enterprises to accelerate its industrial upgrading?"

Aside from the China-related trade factor, Pitlo III believes that whether defense spending issues were involved in this U.S.-Philippines tariff negotiation is also worth noting. He pointed out that the U.S. requires allies to increase their defense budgets to 5% of GDP, but the Philippines faces financial constraints, and the constitution stipulates that national budget must prioritize education expenditures. He speculated that the U.S. made only a minor tariff concession to the Philippines, possibly because Manila could not meet the U.S. requirements for defense spending.

Pitlo III further speculated that the Philippines may make more concessions in military cooperation with the U.S. in the future. "Will it try to offset this by agreeing to deploy more U.S. troops or missile launchers? The modernization of the Philippines' military and coast guard opens the door for partner bids on projects, and the U.S.-Philippines alliance may give priority to U.S. companies in the procurement of advanced platforms," he said.

Regarding the U.S.-Vietnam trade agreement, the Chinese government has noticed the situation and is conducting an assessment. He Yongqian, spokesperson for the Ministry of Commerce, responded during a regular press conference on July 3, stating that the U.S. imposing so-called "reciprocal tariffs" on global trade partners is a typical unilateral bullying practice, and China has consistently opposed it.

"China's position has always been consistent. We welcome all parties to resolve trade disputes with the U.S. through equal consultations, but we firmly oppose any party achieving deals by sacrificing China's interests. If such a situation occurs, China will resolutely counteract it to protect its legitimate rights and interests," He said.

Regarding the issue of U.S.-Philippines military cooperation, the Ministry of Defense has also made multiple responses. In response to the Philippine ambassador to the U.S. stating that the Philippines is confident that the U.S. security commitment to the Philippines will remain unchanged, Wu Qian, director of the Department of Defense News Bureau and spokesperson for the Ministry of Defense, replied that U.S.-Philippines military cooperation must not harm the security interests of other countries or disrupt regional peace and stability. By the way, looking back at history, the U.S. has a record of breaking promises and abandoning allies that is astonishing.

This article is an exclusive contribution from Observer Net. Reproduction without permission is prohibited.

Original: https://www.toutiao.com/article/7532156195696607790/

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