Philippines open to zero tariffs on some US products

MANILA, Philippines — The Philippines is open to cutting tariffs on select American goods to zero in a bid to persuade President Donald Trump to ease the higher-than-expected reciprocal duties he slapped on Filipino products coming to the United States, Finance Secretary Ralph Recto said.

Speaking to reporters, Recto said this was one of the concessions that the Philippines was willing to make to secure an acceptable trade deal with the United States.

READ: Marcos to take up tariffs, security ties with Trump

President Marcos and Trump will hold a bilateral meeting in Washington this week, and both leaders are widely expected to talk about the tariffs.

Recto did not say which US goods might be spared from import duties, saying he didn’t want to get ahead of the talks. But he said that the move would have a minimal impact on government revenues.

In 2024, the Philippines sold $4 billion more in goods to the US than it bought. Filipino exports to the American market hit $12 billion, making up 16.6 percent of the country’s overall export earnings.

“We’ve calculated [the impact on revenue] and given our input to Secretary Deck on what we can negotiate,” Recto said, referring to the government’s economic czar, Frederick Go.

“All of that has been computed. And it’s safe to say that we’re okay in terms of [revenue] loss,” he added.

Trump had announced that the tariff rate on the Philippine goods coming to America was set at 20 percent—higher than the 17 percent rate initially announced in April. The government, which had hoped for a lower imposition, said it was “concerned” about the steeper tariffs, while admitting that previous negotiations did not make much progress.

Baseline rate

In a recent webinar, Darren Tay, head of Asia country risk at BMI, said the Philippines still has a strong chance of negotiating the reciprocal tariff down to the baseline rate of 10 percent.

Tay added that defense spending “will emerge as a point of contention” in the talks.

“Making concessions on defense is one good way of securing a trade deal, given that pushing allies to do more is one of Trump’s priorities,” he said.

“Promising to increase defense spending—that is, to 5 percent of [gross domestic product] as Nato members have done would probably impress Trump. But in practice, we expect the Philippines to offer slightly less than that,” he added.

But overall, Tay said the Philippines would unlikely be at a disadvantage even under the worst possible case scenarios.

“It is worth noting that even in the worst case, and reciprocals rise to 20 percent and all sectoral tariffs apply, including 200 percent on pharmaceuticals, the Philippines would still not be much worse off because it does not export much of these goods to the US,” he said.

“In terms of GDP (gross domestic product), the Philippines is relatively insulated. Besides the fact that export exposure to the US is slightly below average, we know that roughly half of exports to the US actually come in the form of services that are largely provided by the business process outsourcing sector. And those are untouched by tariffs,” he added.

(2025/07/21-02:11)

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