What can President Ferdinand Marcos Jr. possibly do to soften up President Donald Trump into lowering the 20-percent tariff he slapped on Philippine exports to the US?
Citing the significant trade deficit between the US and the Philippines as a reason, Trump, in a letter to Marcos Thursday last week, informed the latter that he would be imposing a 20-percent tariff -– 3 percent more than the earlier 17 percent — zon Philippine exports to the US beginning 1 August.
President Marcos quickly ordered his Special Assistant for Investment and Economic Affairs Frederick Go back to the negotiating table in Washington, and, later this month, he himself will fly there to meet with Trump.
When he gets to the US, it will be either to congratulate Go and his team on their success or to pick up from where they left off and try to convince Trump to reduce the tariff or, ideally, do away with it altogether.
It’s a tough job, but one that needs to be done. We can only wish the President and his team all the luck because so much is at stake here.
America remains the Philippines’ biggest export market and the 20-percent tariff will impact the country’s key exports such as electronic components, machinery, and agricultural products. It will acutely lessen the Philippines’ competitiveness in a crucial global market, hampering revenues and economic development.
Not a few Filipino exporters have thin margins and a 20-percent tariff will leave them unable to compete in the US market, unless they drastically cut the prices of their products. Or they could absorb their production costs, which is hardly a sustainable proposition for small and medium-size businesses.
With an estimated half-million of our people directly or indirectly employed in export–related industries, imagine how the tariff will affect Philippine labor and employment. Think of what this Trump-imposed tariff will do, for instance, in such local sectors as garments and electronics assembly which are labor intensive.
Beyond the Philippines, Trump’s imposition of elevated tariffs is sending shock waves across Southeast Asia. Analyses by the Australian National University in Canberra and Jakarta-based Centre for Strategic and International Studies show that these would reduce Southeast Asian GDP by 2.3 percent and cut employment overall by 5.89 percent.
And if Southeast Asian economies hit back at the US with retaliatory tariffs, tariff contagion would diminish ASEAN GDP by over 11 percent and reduce employment by as much as 25 percent, a situation that would trigger a political and economic debacle.
Nothing can replace the loss of US demand for Southeast Asian goods and, at least where the Philippines is concerned, the government must do as much as it can to turn the challenge posed by the elevated US tariff into a strategic win.
As President Marcos prepares for what, hopefully, would be a pivotal visit to Washington, D.C., he must craft a multidimensional strategy — one that emphasizes mutual Philippine-US economic gains, leveraging the country’s strategic security assets like the EDCA bases and appealing to shared regional stability.
The Philippines has long been aligned with US interests in the region and Marcos’s visit will offer a critical platform to further underscore a partnership between the Philippine and the US that would be beneficial to both nations.
President Marcos could use the EDCA bases as a bargaining chip, suggesting their expanded or more effective use to enhance regional stability and security, particularly in terms of countering the threats in the South China Sea.
The President could propose that sustained and even increased security cooperation would be an incentive for the US to consider a tariff adjustment in recognition of the importance of the Philippines’ security contribution.
The crucial role that the Philippines plays in regional stability, anti-terrorism efforts, and disaster resilience must be emphasized even as, perhaps, a deeper collaboration in military exercises could be offered along with intelligence sharing and joint peace-keeping missions as a way to enhance mutual security.
The President and his economic managers could likewise devise ways by which US businesses could be given priority access to infrastructure, agriculture, technology and other sectors.
At this critical juncture, the Philippines must present itself as both a reliable strategic partner and a fair economic collaborator. By emphasizing the mutual benefits of trade, security, and regional stability and by leveraging its strategic assets like the EDCA bases, President Marcos can negotiate with his US counterpart from a position of strength.
And well, if all else fails, maybe Mr. Marcos can try what White House observers say seems to be the quickest way to get to President Trump’s heart: tell him he’s the greatest and he deserves to be a Nobel Peace Prize laureate (for bombing Iran’s major nuclear facilities which resulted in a ceasefire in the Israel-Iran hostilities).
But seriously, we hope and we wish the President all the luck he (and the country) needs to turn his US visit next week into an opportunity not only to resolve the tariff issue, but to reinforce our long-term friendship, trust, and shared prosperity, ultimately transforming the economic barrier into a bridge for stronger cooperation.