The situation exhibits all the traits of a bully, as it involves the United States warning the Philippines and other trade allies against any retaliatory actions.
US President Donald Trump, as the leader of a superpower, did not hold back in his statements. His words carried the weight of a threat, implying potential consequences for those who dissent. Starting on 1 August 2025, the US will raise tariffs on Philippine goods to 20 percent, up from the previously announced 17 percent.
“If for any reason you decide to raise your tariffs, then whatever number you choose to raise them by will be added to the 20 percent that we will charge,” Trump wrote President Ferdinand R. Marcos Jr. in a letter dated 9 July 2025.
The stern warning resonated with Filipinos, especially those in business, as any retaliatory action could hinder economic growth. Trump blamed the Philippines’ unsustainable trade deficit with the US, asserting that this increase is intended to address years of unfair tariffs, non-tariff policies, and trade barriers.
Tariffs protect domestic industries, but they can also have overwhelmingly negative repercussions, particularly for a developing country like the Philippines. An increase in tariffs will inevitably raise the cost of importing goods from the US, significantly impacting Philippine products that depend on American materials for their production. This rise in costs will ultimately be passed on to Filipino consumers.
The US is a vital market for numerous Filipino products, particularly in dynamic sectors such as electronics, textiles, and agriculture. As US tariffs increase the cost for American consumers, the demand for these exports may decline, inflicting a financial strain on Filipino manufacturers and farmers. This downturn threatens their income and risks job losses in industries that are already precarious.
The repercussions of a diminished export demand can quickly spiral into broader economic instability. Vulnerable industries may bear the brunt of this downturn, leading to layoffs and potentially slowing overall economic growth, a concerning scenario for a developing nation striving for progress.
The same inflationary pressure could disproportionately impact low and middle-income households, eroding their purchasing power. As prices increase, the financial burden on essential goods rises.
International trade will become even more complex if retaliatory measures arise, such as other countries responding to US tariffs with their own trade restrictions. The situation could complicate the Philippines’ trade relations, potentially narrowing the market for Filipino products and diminishing their competitiveness on the global stage.
The heavy reliance on the US market makes the Philippines vulnerable to significant risks stemming from trade disputes and changes in US policy. This latest twist should prompt the country to diversify its trade partnerships to safeguard the economy against external shocks.
To mitigate the negative impact of current vulnerabilities, the government should strengthen domestic industries and seek alternative trade partnerships.
It takes foresight and adaptability to protect Philippine interests amid the fluctuating tides of international trade.