Another “earthquake” is shaping the new world order. In April 2025, then newly reelected President of the United States, Donald Trump, announced a sweeping set of trade tariffs across the globe, the Philippines included.
Popularly known as Liberation Day, this triggered the second trade war, forcing many countries to negotiate reciprocal tariffs with the US. The Philippines ended up with a tariff rate of 19 percent.
Fast forward to this weekend. The Supreme Court of the United States (SCOTUS) struck down the legality of the enacted tariffs based on the International Emergency Economic Powers Act (IEEPA), the basis for the tariffs announced on Liberation Day. This is a significant blow to the trade and foreign policy of the US because it is currently structured around the negotiating tactics of the President.
In his book, “Trump: The Art of the Deal,” which was written together with Tony Schwarz, Trump lays out an important element of a deal when he writes, “Leverage: don’t make deals without it.”
He defines leverage as, “...something the other guy wants, or better yet, needs. Or, best of all, simply can’t do without.” Applying his experience as a businessman, he understands the one thing most economies cannot do without, and that is trade in goods. Thus, the tariffs he applied last year gave the US a significant amount of leverage in trade and foreign policy negotiations.
With the SCOTUS decision, however, the US lost the leverage gained in 2025.
Trump also wrote in his book that he protects himself by being flexible. As another element of the deal, he said, “I always come up with at least a half dozen approaches to making it work, because anything can happen, even to the best-laid plans.”
Thus, within a few hours of losing leverage, President Trump regained part of it by applying a 10-percent global tariff based on Section 122 of the Trade Act of 1974. This imposition of the tariff, however, is time-bound (150 days) but can be extended by Congress. The clock is ticking.
What does this mean for the world and for the Philippines? This presents a new facet of uncertainty for leaders and policymakers under the new world order. While it is a temporary setback for the US, it is still a setback. For the entirety of 2025, President Trump scored victories with his policies and had most of the world negotiating with the US whether in terms of trade or politics.
But this legal loss may be a painful one. In Ironman 2, the supervillain Ivan Vanko, a.k.a. Whiplash, tells Tony Stark, “If you can make God bleed, people will cease to believe in Him.” In other words, evidence of vulnerability reduces Trump’s use of US leverage. This is important given ongoing negotiations around the world, particularly with China, Russia, Iran and Europe.
Does this mean that we will return to the old-world order? That would be a long shot. As Trump expounded on creating leverage, it required imagination. The trade uncertainty has not ended just yet.
For the Philippines, the developments are not material, given that our export sector is not as dependent on the US as those of our Asian peers. While this has hampered our development, it also protects us, to a degree, from this trade uncertainty. If our tariffs are reduced from 19 percent to the new global 10 percent, that is a positive development as it puts us on par with everyone else and our goods become more competitive.
Trump secured a lot of concessions from major US trading partners, including many of our ASEAN neighbors. Through negotiation, Trump opened their economies to US goods. The Philippines only opened some sectors, but kept tariff protections on critical agricultural sectors.
In hindsight, this uncertainty benefits the Philippines because we kept our trade barriers while others did not.
The reality is that the Philippines is small in terms of global trade, and thus the ongoing uncertainty will not affect most Filipinos. The main takeaway here is the negotiation lessons from the US. If we want to sit at the table and influence it, we must work harder and be more imaginative in creating and developing our leverage.