20 hours ago
4
Upgrade to High-Speed Internet for only ₱1499/month!
Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.
Visit Suniway.ph to learn
Just as expected, US President Donald Trump doubled down on his protectionist trade policies and announced on Thursday, April 3 (Manila time) that his government will be imposing steep tariffs on many countries, including the Philippines.
In a Rose Garden event at the White House, Trump brandished a table showing how much the new tariffs will be. Apart from imposing a blanket 10% tariff on imports coming from all countries, tariffs are going to be higher for some 60 countries that run some of the highest trade surpluses with respect to the US (that is, countries from which the US imports more than it exports to).
On top of the list are some of our Asian neighbors, including Cambodia (which will get a 49% reciprocal tariff — meaning that Americans will pay 49% more on goods they import from Cambodia), Laos (48%), Vietnam (46%), Myanmar (44%), Thailand (36%), Indonesia (32%), Malaysia (24%), and Brunei (24%). The Philippines made its way to Trump’s list, too, and we’re getting 17% reciprocal tariffs. So Americans will have to pay 17% more on goods we export to the US. All 10 ASEAN economies are high on Trump’s list.
This is not the first time that Trump erected US trade barriers. Back in 2018, during his first term, Trump raised tariffs on China significantly, initially on steel and aluminum imports, then a 25% tariff on all Chinese goods. This led China to retaliate and impose tariffs on agriculture and automobile imports coming from the US.
More recently, in his second term, Trump imposed a 25% tariff on neighboring Canada and Mexico, and an extra 10% tariff on China. Canada retaliated first with a 25% tariff on goods coming from the US. Mexico has yet to act on it. Total tariffs on Chinese goods are now at a whopping 54%.
These actions appear to be but the initial salvo of a huger trade war against the rest of the world.
Trump’s misguided economics
Before we discuss what to do, let’s try to understand where all this is coming from.
Donald Trump has always branded himself as a dealmaker. In his bestselling book, “The Art of the Deal,” Trump painted himself as a bold and competitive negotiator. As president, he continues to portray himself in this way, and argues that the US has long been getting a bad deal by trading freely with the rest of the world. In March 2025, Trump posted on his Truth Social account, “The U.S. doesn’t have Free Trade. We have ‘Stupid Trade.’ The Entire World is RIPPING US OFF!!!”
In other words, in his mind, free trade is harmful for the US, which is being taken advantage of by other countries. For example, when the US imports many goods from, say, Japan, the US owes a lot of money to Japan, and the US ends up in debt. In economics parlance, the US runs a huge trade deficit with other countries, so that it imports more from some countries than it exports to them.
The list of countries that Trump imposed the highest reciprocal tariffs — Cambodia, Laos, Myanmar, etc. — are also the ones running large trade surpluses with the US. In Trump’s mind, these countries are the ones ripping off America the most.
The way to get even, Trump thinks, is to impose tariffs on other countries.
Back in November 1989, in an interview with ABC, Trump said, “I believe very strongly in tariffs…. I’m saying that all of the many nations that abuse the United States should pay a major tax — like a 15 or a 20% tax on any product they sell in the United States.” He added, “America is being ripped off. And I’ll tell you what. We’re not going to have an America in 10 years if it keeps going like this. We’re a debtor nation, and we have to tax, we have to tariff, we have to protect this country. And nobody’s doing it.”
Fast-forward to 35 years later, we shouldn’t be too surprised by what Trump is doing now. Trump is simply pushing through with his preconceptions of international trade. He effectively raised the average US tariff rate to its highest since the 1930s — undoing decades of US leadership in free trade.
The problem, however, is that Trump’s notions of tariffs and international trade are very wrong, very misguided, and going to be very harmful — not just for America but also the rest of the world.
Global fallout
First, Americans themselves will feel the pinch. Far from being a tax on other countries, a tariff is a tax paid by the citizens of a country for imported goods. In 2024, economists estimated that with a 20% tariff, American households stand to pay an extra $2,600 to $4,000 on goods they consume. That’s a lot of money. But now, Americans may need to pay even more for Trump’s larger-than-expected and broader-than-expected tariffs.
Among the goods that will likely be affected are automobiles, electronics, clothes, furniture, and even food and drinks such as coffee and wine. Bringing about higher inflation is supremely ironic, because Trump promised to lower prices on the campaign trail. On August 9, 2024, he said, “Starting on day one, we will end inflation and make America affordable again, to bring down the prices of all goods.” Sad to say, Americans have been duped.
Second, accelerating prices and higher inflation will spell trouble for the US economy as a whole. It’s fairly easy to predict what will happen next. Households will spend less, businesses will invest less, and even exporters will be hurt if many of the components they use are more expensive (even more so if other countries start to retaliate). Economists are now seeing a much higher probability of a US recession, or a downturn in overall spending, if the US isn’t in one right now. A recession is bad news because that means more people will be out of work, some people will lose their incomes, and some businesses will have to shut down.
The thing is, Trump’s global tariffs threaten many other economies as well. I doubt the Philippines will have a recession any time soon, but that’s not a remote possibility for other countries. Cruelly, Trump also imposed tariffs on tiny and much poorer countries like Micronesia and the Democratic Republic of Congo, which can’t fight a trade war on their own. At any rate, global growth stands to slow down significantly, and that’s the main reason stock markets are tanking as we speak. Apart from slower consumer spending, investors will want to put off their investments, too, as they wait and see where Trump goes with his trade war.
Third, Trump argues that his global tariffs will raise extra revenues for the US to the tune of at least $1 trillion over the next year. But with higher prices, Americans will tend to reduce their consumption spending by a similar amount (possibly more). And when the US falls into a recession, that can also push the federal government to spend on subsidies and aid packages to affected workers and industries — thus increasing spending and offsetting any gains in revenues arising from the tariffs.
Fourth, what about the claim that tariffs will reduce its trade deficit with other countries? The true goal of a tariff is to dissuade people from importing and consuming too many foreign goods. But if other countries retaliate, it becomes harder for US goods to penetrate foreign markets, so US exports may be hurt at the same time that their imports are hurt. In the end, the trade deficit will likely not go down as much as they think.
What can the Philippines do?
Because the Philippines runs a trade surplus with the US (we export more to them than we import from them), we were in Trump’s radar, and he wants to slap on our goods a 17% tariff.
What products will be affected? In 2024, data show that more than half (53%) of our exports to the US were electronic products, totaling $6.4 billion. Predictably, this is the sector that will be hurt the most. In a previous analysis published in February 2025, staff economists in Congress also said that exports of electrical and electronic equipment (like storage devices and media, automatic data processing machines, and electric transformers and converters) are most at risk of Trump’s tariffs. Other product categories, like coconut and palm kernel oil, are also at risk. In general, they say we should watch out for high-value manufacturing exports that previously had little to no tariffs.
Should the Philippines retaliate? When a country like the Philippines retaliates to try to teach the US a lesson, we invariably hurt ourselves, too, by making imported goods more expensive for Filipinos, and also dampening spending. If the US sees we’re fighting back, they may decide to bump up tariffs on us. It’s a slippery slope, a vicious cycle. Nobody wins from a trade war.
If the Marcos administration retaliates anyway, Filipinos will have to pay higher prices for goods we import from the US. That includes electronic products (30% of our imports from the US), animal feeds, and cereals. We’re not too exposed to the US by way of imports, but higher reciprocal tariffs will ultimately be felt by Filipinos, too.
This is not to say there are no upsides, too. If American consumers decide to import less from countries on whom Trump imposed very high tariffs, they may decide to import from less affected countries, including the Philippines. But this is speculative, and the benefits from “trade diversion” are likely to be modest.
Here’s what we can do:
First, we need to strengthen our trading partnerships with other countries. We need to diversify the markets to which we export our goods, and also from which we import goods. Much of our biggest trading partners are in Asia, anyway, and we should deepen our trading relations with them to further reduce reliance on the US (or any single country, for that matter).
Second, let’s not fly off the handle and retaliate immediately. With high-level dialogue, maybe we can still persuade Trump not to officially impose the higher tariffs on us — especially in light of our foreign relations with them and the partnerships we’ve forged amid the West Philippine Sea issues. More importantly, we should rally support within ASEAN, which is turning out to be a major victim of Trump’s trade war. Perhaps this unfair and whimsical move by Trump can be elevated to the World Trade Organization through its dispute settlement mechanism.
Third and last, regardless of Trump’s policies, we should invest in upgrading our domestic economy’s competitiveness, by boosting manufacturing, agricultural value chains, and logistics. Not only can this make us a more attractive trading partner as countries divert trade away from the US, but more importantly this can improve our long-term prospects and make us more resilient to external shocks.
All in all, Trump called his global tariff announcement “Liberation Day.” But in effect, he’s pinning down the world and shackling us all to a global trade war which, in the end, nobody will win.
Why does the entire world need to put up with and suffer from a man’s twisted ideas on economics? – Rappler.com
JC Punongbayan, PhD is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. Follow him on Instagram (@jcpunongbayan) and Usapang Econ Podcast.
