THE July 9, 2025 letter from US President
Donald Trump to President Ferdinand Marcos Jr. outlines a blunt and
coercive economic ultimatum: beginning Aug. 1, the US will impose a
20-percent tariff on all Philippine exports to address what Trump calls
an “unfair” trade relationship and a “significant trade deficit.” Goods
transshipped to evade tariffs will be met with even harsher penalties.
Trump accuses the Philippines of maintaining tariff and non-tariff
barriers that make the trade relationship “far from reciprocal” and
“unsustainable,” positioning the deficit as a national security threat
to the US. He extends a conditional reprieve, offering to lift tariffs
if Philippine firms relocate manufacturing to the US, sweetened by
expedited approvals for investments on American soil. Conversely, any
retaliatory tariffs from Manila will be matched and exceeded by the US.
Though
framed in diplomatic language, the letter starkly reveals a
transactional and punitive approach to trade. Trump’s strategy reduces
the alliance to a commercial quid pro quo, using friendship and
partnership as leverage for economic subjugation. The letter reflects a
broader shift from multilateral cooperation toward bilateral coercion,
where the cost of resistance is isolation, and the price of compliance
is the loss of sovereignty.
Trump’s misguided assertion
Trump’s assertion
that the US-Philippine trade relationship is “far from reciprocal” and
his tariff threats toward the Philippines lie in the distortion of the
concept of “reciprocity” in trade, which is not only misleading but
intellectually dishonest when examined in context and crumbles under
scrutiny.
First is the mischaracterization of tariff structures. Trump’s claim
that the trade relationship is “far from reciprocal” and that the US
suffers due to Philippine tariffs and barriers is not backed by
empirical trade data. Philippine tariffs are not excessively
protectionist. As a developing economy and a member of the World Trade
Organization (WTO), the Philippines generally complies with the
Most-Favored-Nation (MFN) bound tariff rates.
The average MFN
applied tariff rate in the Philippines is approximately 6.3 percent,
while the US average is around 2.3 percent. However, this is typical for
developing economies, rather than being uniquely unfair or hostile.
They are not apples-to-apples. Comparing these figures in isolation,
without regard for developmental disparities, is intellectually
dishonest. The Philippines, as a lower-middle-income economy, maintains
tariffs that are well within WTO norms for its development level. The
US, on the other hand, is a highly industrialized economy with far more
advanced market structures. To ignore these developmental disparities in
pursuit of numerical symmetry is to wield economic policy with a
sledgehammer rather than a scalpel.
Also, the US has a persistent global trade deficit, not just with the
Philippines. The bilateral trade deficit between the US and the
Philippines is relatively modest compared to other countries, such as
China, Mexico or Vietnam. In 2023, for instance, US imports from the
Philippines were valued at approximately $15 billion, while exports to
the Philippines were around $9 billion, resulting in a deficit, albeit
not an insignificant one or a structurally damaging one, but hardly
catastrophic. Note that such an imbalance is not due to “unfair” trade
practices, but rather to structural economic forces, including
consumption patterns, global value chains and capital movements. Yet
Trump paints this as deliberate exploitation by the Philippines when, in
reality, it is a natural feature of global trade. What Trump refuses to
acknowledge is that trade deficits reflect structural global dynamics,
not simple acts of “unfairness” or the Philippines engaging in unfair
practices.
Economic coercion and weaponizing ‘non-tariff barriers’
Similarly, encouraging Filipino firms/manufacturers to shift
operations to the US under tariff threats is economic coercion. Filipino
firms/manufacturers are given two choices: move their manufacturing to
the US, or face tariffs. And should the Philippines retaliate with its
own tariffs? Trump vows to match them and add another 20 percent. This
is less a trade strategy than a form of economic blackmail, which is not
only a coercive demand but also undermines the Philippines’ economic
sovereignty, as well as its development goals. In any case, it will
dismantle the Philippines’ domestic value chains and industrial
sovereignty under the guise of restoring fairness. This proposal
promotes economic extraction and dependency, rather than genuine
partnership or friendship.
Truth be told, this is less a diplomatic overture and more a blunt
instrument of economic intimidation. This isn’t negotiation; it’s
extortion. Worse, it signals a worldview where the US views its allies
not as equals, but as dependencies to be disciplined, rather than
engaged. Forcing developing nations to offshore their own industries to
the US while gutting their domestic value chains is a blueprint for
dependency, not development.
Further muddying the waters, Trump vaguely accuses the Philippines of
imposing “non-tariff barriers” without evidence. Yet, the Philippines,
like most nations, implements standard regulatory practices related to
health, safety and labeling, rather than discriminatory protectionism.
There is little to no substantiation that US companies face unusual or
politically motivated barriers in the Philippine market.
Conclusion
Trump’s recent tariff threats against the Philippines offer more
than just a window into his economic thinking; they serve as a
cautionary tale about the perils of transactional diplomacy masquerading
as a strategic alliance. At its core, Trump’s logic is dangerously
simplistic: it conflates reciprocity in trade with identical tariff
rates, without considering the vast asymmetries in development,
industrial maturity and historical circumstances between nations.
Expecting a developing country like the Philippines to mirror US trade
policy is akin to expecting a bicycle to race a Formula One car on the
same track in terms of speed and performance, a false equivalence rooted
in arrogance rather than sound analysis.
Although Trump’s letter
is cloaked in the language of cooperation, its message is unmistakably
coercive. What emerges is a more profound and unsettling truth: that
under Trump 2.0, alliance solidarity and diplomacy are no longer rooted
in trust, mutual respect or shared strategic values. It now comes with
an invoice. Tariffs, not treaties, have become the new currency of
friendship. The “ironclad” promises once held up as hallmarks of US
commitment now appear to be little more than brittle slogans, easy to
recite, but quick to crumble under pressure.
Such maneuvers strip away the illusion of alliance and expose the
asymmetry at its core. They raise an urgent question for Philippine
policymakers: Is the US alliance a genuine shield, or merely a tool to
cloak deeper, self-serving interests of the “empire of chaos”? The
answer may well define the nation’s foreign policy path in the years to
come.
Moreover, if the United States truly values its alliances, it must
abandon the hubris of transactional diplomacy in favor of genuine
economic respect. Friendship, whether between individuals or nations, is
not about how much you can extract, but about how much you are willing
to grow together.
As Henry Kissinger once warned, “To be an enemy
of the United States can be dangerous, but to be a friend is fatal.”
That warming insight now echoes with eerie clarity in Manila. For if
this is how Washington treats its friends, one must shudder to imagine
the fate reserved for those it deems expendable.