Reduced export competitiveness: The 19% tariff will make Philippine goods — such as electronics, furniture, textiles, and agricultural products — less competitive in the US market, likely reducing export volumes.

Trade deficit impact: The US is a significant partner, importing $14.2 billion in goods from the Philippines in the previous year (2024), with the new tariff expected to put downward pressure on these figures and potentially increase the trade deficit for Manila.

Pressure on local industries: As US imports become cheaper in the Philippines due to reduced tariffs, local manufacturers could face stiffer competition. This could drive some to innovate or improve efficiency, but may also risk the survival of less competitive domestic industries.

Zero tariffs for exports: US exporters stand to benefit from “open access” to Philippine markets, particularly in automobiles, agricultural products, and pharmaceuticals — potentially increasing US sales in the Philippines.

Cheaper Philippine imports lose appeal: With higher tariffs, US companies and consumers are likely to shift away from Philippine goods, especially in sectors such as automotive parts and textiles.

Inflation concerns: The increased cost of imported Philippine goods could push up prices for US businesses reliant on Filipino supply chains, though the US government argues that the overall impact on inflation remains uncertain.

Before the Trump-Marcos Jr. tariff deal, the Philippines imposed high tariffs on US goods, including automotive products. The computations of these tariffs were tangled in bureaucratic mumbo-jumbo.

Moreover, individual owners who wish to import US-made goods to the Philippines, even for personal use, have completely shunned the idea of doing so, as they are dingged on many sides, especially at Manila’s Customs.

President Marcos Jr. confirmed that as part of the deal, the Philippines will finally “open” the automotive market by granting zero tariffs on US-made cars.

This is a major shift from the previous tariff regime.

Deepening of military ties: The agreement is situated within a context of enhanced military cooperation, with both leaders reaffirming commitments to mutual defense and regional security amid rising tensions with China.

Regional trade competition: The Philippines’ 19% tariff rate is below Vietnam’s 20% rate but higher than Singapore’s 10%. This shows the competitive pressures among Southeast Asian countries negotiating with the US.

The US-Philippines tariff deal marks a seismic shift in bilateral trade, with the US adopting one of its highest tariff rates for Filipino goods in modern history, while American products gain improved access to the Philippine market. 

The economic toll will likely fall hardest on some of the Philippine exporters and manufacturers.

On the flipside, Filipino consumers may benefit from cheaper US imports, assuming the local government implements effective support measures. 

Strategically, the deal strengthens military and economic ties against the backdrop of growing regional competition and security concerns in the South China Sea.