Close your eyes, suspend your disbelief, count to 10 and open your eyes to Joey Salceda’s magic show featuring a highly successful BBM photo-op with Donald Trump at the White House.
“Don’t look at the 19 percent,” Salceda urges us. “Effective tariffs on Phl exports were just at 6.65 percent, thanks to exemptions negotiated prior to the PBBM visit. After PBBM visit, effective rate was reduced further to just 6.3 percent despite having little room for downward adjustment.”
That’s not all, Joey says. “The one- percentage-point reduction seems more like a goodwill gesture for our continuing talks on Phl-US FTA…
“In other words, there wasn’t much to reduce, so PBBM discussions had to go beyond trade.”
Salceda is probably right. The numbers he crunched may be a more accurate way of viewing the headline 19 percent tariff.
Salceda claims before BBM arrived in DC, “we got 20 percent on 31 percent of exports, instead of 20 percent on 100 percent of exports early on. It’s a 69-percentage point reduction in covered trade value…bringing the weighted average tariff rate down to 6.6 percent from the 20 percent.”
But how come the government negotiators are not talking about it this way? Only Joey, the kitbitzer, is. Instead, we get this from the Trade Secretary, one of the two lead negotiators.
“For now, since it was already announced by President Trump, then it’s final. But of course, we’re really hoping we can bring it down,” Trade Secretary Cristina Roque told reporters…”
Roque said the US was asking for zero tariff for all American goods entering the Philippines. While the Philippines is hoping to still reduce the 19 percent tariff, Roque said the government could no longer offer anything to the US.
In a report, Nomura Global Markets Research described the impact of the new US tariff on the Philippines as “substantial,” shaving 0.4 percentage point off our GDP growth. Nomura’s baseline GDP growth forecast of 5.3 percent for 2025 already falls short of the administration’s target of 5.5 to 6.5 percent.
Nomura initially expected the tariff rate to be reduced to 10 percent “on the assumption that the Philippines is a strong ally of the US and is not a third country for transshipments.”
“As it turns out, despite the visit to Washington DC by President Marcos and both sides reiterating the need for a strong partnership, the tariff was still set at 19 percent, which is even higher than the ‘Liberation Day’ level of 17 percent.”
Nomura probably didn’t sharpen their pencils enough to see what Salceda saw.
Outside of trade, Trump also didn’t reiterate the “iron clad guarantee” of American assistance in case of trouble in the West Philippine Sea. Trump is expected to visit Beijing later this year and China is obviously more important to American interests than the Philippines. We are expendable if push comes to shove.
Indeed, even for Taiwan, Trump has not committed to direct US military support – unlike President Biden, who has on occasion said US forces would be deployed.
Trump’s Pentagon adviser Elbridge Colby has described Taiwan as not an “existential” US interest, leading some analysts to argue that the US defense perimeter under Trump may exclude Taiwan, stopping at allies like Japan and South Korea.
Are we more strategically important to America than Taiwan?
As The Economist observed: “Although Donald Trump often accuses China of abusing America through its trade practices, he seems to admire the country’s ruler, Xi Jinping.”
So, no Joey… we were not given defense assurances that we can take to the bank.
As for the $4 billion for the Indo-Pacific Security Assistance Initiative to bolster the capabilities of allies such as Japan, Australia and the Philippines, they have not set aside any amount for us.
As for the $1.2 billion Resilience Fund for Pacific and Southeast Asia, nothing has also been promised to us. Same with the $1.2 billion Munitions and Stockpile Replenishment.
As for the acquisition of 40 percent stake of Aboitiz InfraCapital by BlackRock, BBM and Trump had nothing to do with that. Aboitiz got that deal on the strength of the good performance and prospects of the Aboitiz infrastructure subsidiary.
The $15 million in new support for private sector development under the Luzon Economic Corridor and $48 million in additional foreign assistance are too small to be considered a win.
We have not received any concessions on the remittances tax that Trump’s Big Beautiful Act imposes.
As for Joey’s hope that the US can help us set up the Virology and Vaccine Institute of the Philippines, fat chance for that. Trump has been cutting budgets of US medical research institutions including the US National Institutes of Health.
Same thing with hoping our Office for Civil Defense can recover a $40 million partnership with USAID for disaster preparedness. Trump has been gutting US weather and disaster relief agencies. Note the recent Texas flooding disaster and plans to abolish FEMA.
By today, we should know if the zero tariff for US goods applies to all products. If it does, it is good news for consumers because the Americans produce rice, corn, vegetable oil, pork, poultry way cheaper than us. But what happens to our farmers?
Also, not sure we should calibrate our food safety standards to accept antibiotic-heavy US beef into our market.
On the other hand, the tax-free entry of American milk will be a big positive in our nutrition programs to keep our schoolchildren from stunting.
But Joey is right about this thought: “Countries don’t trade their way into strength. They build the capacity they themselves need, become so good at it that they develop an advantage and trade follows.”
That’s a lot of work we have failed to do all these years. Joey knows achieving a trade advantage the world can respect can’t happen by magic.
Boo Chanco’s email address is [email protected]. Follow him on X @boochanco
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