Trump cuts tariff on the Philippines from 20 to 19% due to 'special relationship', US to 'work together militarily'

The U.S. has struck a trade deal with the Philippines, with US President Donald Trump agreeing to lower tariffs to 19 per cent, a mere 1 per cent drop from the 20 per cent threatened earlier in July.

The new tariff is still higher than the 17 per cent rate set in April when Trump first announced what he called reciprocal tariff rates for dozens of countries.

According to U.S. government data, as reported in Bloomberg, the U.S. held a trade deficit of USD$4.9 billion (about S$6.2 billion) with the Philippines in 2024.

"Beautiful visit"

Trump announced the deal in a post on Truth Social on Jul. 22,  after meeting with Philippine President Ferdinand Marcos Jr at the White House.

He stated that the visit by Marcos was "beautiful", and called Marcos a "very good, and tough," negotiator.

He further added that on top of the trade deal, the U.S. and the Philippines "will work together militarily", but provided no further details.

Philippines offers open market, zero tariffs on certain US goods

According to Inquirer, the Philippines also agreed to offer an open market to the U.S. and zero tariffs on certain goods.

Marcos confirmed that the Philippines would no longer charge tariffs on U.S. imports in the automobile sector.

He also added that imports of soy, wheat and pharmaceutical products from the U.S. would increase, with the latter resulting in lower prices of medicine.

However, there was no clarification as to whether or not tariffs would be imposed on those sectors.

Bloomberg reported that the Philippines had previously said that it could not offer the U.S. a zero tariff as it would hurt domestic businesses.

However, they were planning to increase imports of U.S. farm goods and boost exports of semi-conductors, coconut and mango products to the U.S.

Washington accounted for 16.6 per cent of Manila's exports in 2024, making America the Philippines' largest export destination, Inquirer reported.

"Still a significant achievement"

Inquirer reported that during a briefing with reporters at the Blair House on Jul. 22, Marcos stated that though the one per cent drop in tariffs "might seem like a very small concession", it was still a "significant achievement".

Moreover, when asked about whether the deal was seen as a loss on part of the Philippines, Marcos said that "that's how negotiations go".

"We tried very hard to see what we can do and we managed a one [percentage point] decrease in tariff rates."

According to ABS-CBN, Marcos said they were told that the reason for the lower tariff rate "is because of the special relationship with the Philippines and the United States."

Top photo via U.S. Embassy in the Philippines/Facebook