Fruits of the official visit

President Bongbong Marcos Jr. concluded a three-day official visit to the United States, where he met with President Donald Trump to discuss trade and defense matters. The result of the trade talks was a 1% decrease in tariffs to 19% on Philippine products, while certain U.S. goods such as automobiles will be tariff-free. To be clear, a tariff is a tax which the importing company pays. It is not paid by the country of origin, which Trump insisted during his campaign. Now that he is president once again, he is walking back on that interpretation, even telling companies to “eat the tariffs,” and not pass them on to consumers as it would make him look bad.

The Philippines mainly exports semiconductors and electronic products, transport equipment, car parts, garments, chemical products, copper, nickel, abaca, coconut oil, and fruits. If I understand correctly, all those products will be subject to a 19% tariff once they reach the U.S., which will be shouldered by the importing company. They will in turn pass it on to consumers, raising prices for Americans.

Some are saying we got the short end of the stick and that President Marcos Jr. capitulated to Trump. Philippine products seem to be at a disadvantage with the 19% tariff, which is even higher than the 17% tariff Trump announced during his “Liberation Day”. How this affects manufacturing in the country remains to be seen. The administration may have to renegotiate the tariffs imposed on Philippine goods if exports decline. We are already seeing an explosion of electric vehicles on the road since they became tariff-free. Tesla has already entered the local market.

The administration is touting the $21 billion in investment pledges by the U.S. made during the official visit, adding they have the potential to create jobs. Again, that remains to be seen. We all know the pledges made by China during the Duterte administration. But aside from the trade deals made, defense ties between the two countries have been strengthened, particularly the U.S. commitment to the 1951 Mutual Defense Treaty, which former president Duterte almost scrapped. There is even talk of the U.S. building an ammunition manufacturing hub in Subic Bay. But there already is pushback on this plan.

The Marcos administration is doing everything to strengthen ties with the U.S. With China becoming more aggressive in the South China Sea, we need a superpower to back us up in case of trouble. And trouble may be brewing between China and Taiwan, a conflict the country may be inadvertently drawn into.