SCUTTLEBUTT

Trump purely transactional

The 20 percent tariff on goods entering the United States, effective 1 August, as part of a broader US tariff policy under President Donald Trump is purely a business play.

The increase from the previously announced 17 percent tariff, alongside similar increases for Brunei, Japan and Malaysia mainly considered the extent of US trade imbalance.

Tariff letters were sent to at least 25 countries, including the Philippines, Brunei, Moldova, Algeria, Iraq, Libya, Sri Lanka, Japan, South Korea, Malaysia, and others, outlining new “reciprocal” tariff rates as part of Trump’s “America First” trade policy.

The aim is to address perceived trade imbalances, protect US industries, and encourage foreign companies to manufacture in the US.

The tariff rate increased from 17 percent (announced in April 2025) to 20 percent, while Brunei, Japan, and Malaysia saw their rates rise from 24 percent to 25 percent.

Other countries, such as Moldova, Iraq and Sri Lanka, experienced reductions from their April rates, indicating a varied approach to tariff adjustments.

The US trade deficit with the Philippines was $4.9 billion in 2024, with $14.2 billion in imports and $9.3 billion in exports. While significant for the Philippines, where the US is the top export market, accounting for 17 percent of total exports, the deficit is relatively small compared to major trading partners.

The tariff letters emphasize “non-reciprocal” trade relationships, with Trump claiming that countries like the Philippines impose higher tariffs on US goods, a supposed 34 percent, though some analyses suggest the actual tariff on US goods averages closer to 6.1 percent.

Its smaller economic footprint may limit the country’s leverage in bilateral negotiations.

The US may prioritize negotiations with larger economies, relegating smaller partners, such as the Philippines, to standardized or less favorable terms.

Philippine Ambassador Jose Manuel Romualdez indicated Manila is “still planning to negotiate that down.”

The tariff increase, according to a trade negotiator, could indicate that earlier negotiations (post-April 2025, when tariffs were paused at 10 percent for 90 days) did not yield concessions satisfactory to the US. Trump’s letters emphasize reciprocity, and Philippine trade distortions may have been perceived as insufficiently addressed.