Terrifying tariffs

It’s an instance when being late to the party yields benefits.

Unlike Vietnam, a former enemy of the United States, the Philippines did not really develop itself as an export powerhouse and was not shipping that many manufactured products to its long-time trading partner and its only defense treaty ally, the US.

So when President Donald Trump shocked the world to punish all exporting countries to the US, with of minimum 10 percent tariff for all countries (starting April 5, 2025) to as high as 54 percent reciprocal tariff (starting April 9, 2025) for countries enjoying massive trade surpluses, like China and most ASEAN countries, the Philippines (slapped 17 percent tariff) even sounded warm to the stiff impositions. US tariffs likely will kill globalization and trigger inflation in America and in many other countries.

“The impact of this won’t be too big. It will be very minimal,” assured Palace press officer Claire Castro said at a press briefing, citing the Department of Trade and Industry (DTI)’s statement.

“The new tariffs put the Philippines in a more advantageous position for certain export products, like coconuts (also a Thai export),” says Trade Secretary Cris Roque.

She says Manila will negotiate with the US for enhanced market access for its key export interests like autos, dairy products, frozen meat and soybeans, under a bilateral trade agreement. Notably exempt from the tariff hikes are Philippine exports such as copper ores and concentrates.

In 2024, the Philippines exported $14.2 billion to the US and imported $9.3 billion for a trade surplus in Manila’s favor of $4.9 billion.

 On April 3, 2025 Manila time, Trump slammed the highest ever tariffs on its trading partners in nearly 100 years. “For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” he said at the White House Rose Garden against a backdrop of US flags. “This is Liberation Day.”

 Trump wants countries to follow trade’s golden rule: treat us like we treat you. But he sounds like every nation exporting to the US is an enemy.

Hardest hit are the closest allies and long-time suppliers of goods to the US. China, America’s largest trading partner, was slapped 34 percent reciprocal tariff on top of an earlier 20 percent tariff, for an effective tariff of 54 percent – still lower than Trump’s campaign promise of 60 percent.

ASEAN countries will suffer, badly. The ten-nation bloc does $416.15 billion trade with the US, $352.3 billion in exports and $124.6 billion in imports, for a whopping trade surplus in ASEAN’s favor of $227.7 billion. That imbalance has to stop.

Cambodia gets 49 percent, Laos 48 percent, Vietnam 46 percent and Myanmar 45 percent, tariffs that are among the highest in the world. The four countries are also the most pro-China among ASEAN members.

China had used them to relocate its factories and hide from US tariffs. Vietnam hosts many Chinese factories. Vietnam’s trade surplus with the US is a record $123 billion in 2024, only behind China’s $295.4 billion, the European Union’s 198.2 billion euros and Mexico’s $171.8 billion. The US claims effective Vietnam tariffs on US exports are 90 percent. So Washington counters that with its own 46 percent (a 50 percent discount) by April 9, 2025.

 Thailand is hit with 36 percent; Indonesia 32 percent; Malaysia and Brunei, 24 percent.

The Philippines? Well, just 17 percent. Singapore gets 10 percent, up from zero.

Exempt from the new US tariff hikes are copper, pharmaceuticals, semiconductors, lumber articles, energy products and certain critical minerals that are unavailable in the US, as well as steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs.

US reciprocal tariffs assumes that persistent trade deficits arise from a combination of tariff and non-tariff factors that inhibit trade from achieving balance. The US thinks tariffs will lower its imports. US trade deficit with the world is a whopping $1.2 trillion.

Trump claims foreign trade and economic practices have created a national emergency, the $1.2-trillion deficit. The high tariffs are to strengthen the US international economic position and protect American workers, the White House said, explaining the terrifying tariffs.

US companies pay yearly over $200 billion in value-added taxes (VAT) to foreign governments – a “double-whammy” on US companies who pay the tax at the European border, while European companies don’t pay tax to the US on the income from their exports to the US.

Additionally, counterfeit goods, pirated software and theft of trade secrets cost the US economy $225 billion and $600 billion.

Counterfeit products not only pose a significant risk to US competitiveness, but also threaten the security, health and safety of Americans. The US links the $4.4-billion global trade in counterfeit pharmaceuticals to the distribution of deadly fentanyl-laced drugs.

“America’s large and persistent trade deficits have led to the hollowing out of US manufacturing base; resulted in a lack of incentive to increase advanced domestic manufacturing capacity; undermined critical supply chains and rendered our defense-industrial base dependent on foreign adversaries,” says the White House.

Trump invoked the International Emergency Economic Powers Act of 1977 (IEEPA) to address a claimed national emergency. Individualized reciprocal tariffs are slapped on countries enjoying the biggest trade surpluses with the US.

All other countries will continue to be subject to the original 10 percent tariff baseline, effective midnight of April 9, 2025.

The tariffs will remain in effect until Trump feels that the threat posed by the trade deficit and underlying nonreciprocal treatment are satisfied, resolved or mitigated.

IEEPA allows Trump to increase tariffs if trading partners retaliate or decrease the tariffs to counter his tariffs.

Trump believes tariffs are necessary to ensure fair trade, protect American workers and reduce the trade deficit.

Get ready for the real total war – the trade war.

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