Reacting to the tariff

It’s been a week since Trump’s Liberation Day of atrocious tariff increases, which affected all countries including islands whose only population are some penguins.

We are not really that affected by the Trump tariffs because we don’t export much and we were imposed a relatively small tariff. But we could benefit from the exorbitant tariffs being imposed on our tiger economy neighbors like Vietnam.

To her credit, Trade Secretary Cristina Roque recognized the potential gain for the country from the imposition of the new high-level tariffs on our ASEAN neighbors.

“The new tariffs also put the Philippines in a more advantageous position... specifically for certain export products. The task at hand right now for DTI and other government agencies is how to act fast and take advantage of this new development,” she said.

NEDA Secretary Arsi Balisacan’s reaction was also good and realistic.

“With or without the trade policy changes in the US, maintaining sound macroeconomic fundamentals, improving the ease of doing business, maximizing existing trade agreements and forging new partnerships are still the most important strategies we can pursue…”

For his part, Special Assistant to the President for Investment and Economic Affairs Frederick Go is seeing opportunities for the Philippines to take advantage of its relatively lower tariff compared to its neighbors.

All talk. The important missing thing is an action plan. By this time, the DTI Secretary and Secretary Deck Go should have been meeting with Filipino exporters and devising a program that could be quickly launched to precisely take advantage of the situation. One week has passed and we have yet to hear such a plan of action taking shape.

By now, the economic managers in the Cabinet should have a list of export-oriented companies with excess capacities that could be used right away to increase our market share of the US export markets of, for example, Cambodia and Vietnam. Can our semiconductor industry gain from the unfolding mess created by the Trump tariffs? Is our garments industry able to quickly take advantage of Cambodia’s punishing 49 percent Trump tariff rate?

But, according to the Washington Post, “Trump officials also wanted regulations and other barriers to be wiped away to boost US goods and services being sold abroad.”

The US Trade Representative 2025 National Trade Estimate report has a long list of non-tariff barriers from the Philippines they want dismantled. Good luck dismantling corruption at Customs!

We have to take our hats off to the Vietnamese officials who not only anticipated the Trump tariffs by sending a trade mission to Washington a week before Liberation Day. Then, shortly after Trump’s White House announcement, Vietnam’s top leader, To Lam, personally called Trump and offered to reduce tariffs on US imports to zero, and urged him to do the same.

The Vietnamese leader also wrote to President Trump asking him to appoint a US representative to lead negotiations with Ho Duc Phoc, Vietnamese deputy prime minister who was already in the US, “with the goal of reaching an agreement as soon as possible.”

In his letter, Mr. Lam also asked Mr. Trump to meet him in person in Washington at the end of May “to jointly come to an agreement on this important matter, for the benefit of both our peoples... ”

Mr. Trump was apparently pleased with Vietnam’s reaction. “Just had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, who told me that Vietnam wants to cut their tariffs down to zero if they are able to make an agreement with the US,” Trump wrote on his Truth Social platform.

“I thanked him on behalf of our country, and said I look forward to a meeting in the near future,” Trump added. Trump also said “Vietnam: great negotiators, great people, they like me. I like them.”

The two leaders agreed they will continue talking “to soon sign a bilateral agreement” on tariffs, the Vietnamese government said, adding Trump accepted an invitation to visit Vietnam soon.

Vietnam was also preparing to send a mission to the US next week which could seal a deal for the purchase of Boeing planes by a Vietnamese airline. Best of all, the Trump organization is also developing a $1.5-billion golf course and hotel project in Vietnam’s northern Hung Yen province, Mr. Lam’s home province.

This is indeed a masterclass in how to quickly and positively react to someone like Trump. The Vietnamese knew that massaging Trump’s ego and being the first country to positively respond to Trump’s tariff announcement was how to save Vietnam’s largest export market, accounting for about 30 percent of the country’s total exports. A 46-percent tariff rate would put 5.5 percent of Vietnam’s gross domestic product at risk.

Trump claims Vietnam charges the US a 90 percent tariff. Vietnam’s average applied tariff rate, per World Trade Organization data, stands at 9.4 percent. But the Vietnamese officials didn’t even try to correct Trump’s number. They just zeroed in on what’s important and that’s to get on the good side of Trump so the fast-growing Vietnamese economy does not screech into a halt.

The Vietnamese disregarded observations that Trump wanted to bring the US economy back to the McKinley 1890s era (not 1990s which was a typo error in my column last Monday). Their focus was the here and now and saving their economy. Trump claims leaders of 50 countries have called him too.

The Vietnamese officials showed a sense of urgency which our officials have yet to show. Because they acted the way they did, they could well get Trump to agree on a much lower tariff. That would supercharge the Vietnamese economy even more than it already is.

Looks like we will miss the bus again.

Boo Chanco’s email address is bchanco@gmail.com. Follow him on X @boochanco