'25 trade review: Steering thru “Trump shock'

There’s no better word to describe the trade environment this year than uncertainty, as the country endured a slew of changes and setbacks, particularly due to the policies of the United States (US), its closest ally and largest trading partner.

- BY DEXTER BARRO II

It is no surprise that when US President Donald Trump was reelected, he would be bent on addressing what he deemed as “unfair” trade practices, echoing a similar push during his first term.

What surprised many was just how far he was willing to go.

When Trump first revealed plans to impose his so-called reciprocal tariffs, the Department of Trade and Industry (DTI) was confident that it would just be “business as usual” for the Philippines.

The higher tariff rate was, after all, designed to target trading partners with whom America carries steep deficits. Data from the Office of the US Trade Representative (USTR) showed that the US goods trade deficit with the country stood at $4.9 billion last year.

In addition, the US has long been a key partner for the Philippines, marked by decades of trade ties, military alliance, and cultural exchange-even including 48 years of colonization.

On his so-called "Liberation Day" on April 2, President Trump announced sweeping tariffs on nearly all countries, including a baseline 10-percent tariff and higher reciprocal tariffs. The Philippines was slapped with a 17 percent reciprocal tariff.

This means that shipments coming from the country would be subject to additional duties upon arrival in America.

Trump saw the protectionist policy as a move to revive domestic production, a position that the government, oddly enough, agreed with.

Then-Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA), and now Finance Secretary Frederick Go argued that it could inject some much-needed investments to revive the manufacturing sector since the country's tariffs, at that time, were significantly lower than its peers in Southeast Asia.

Several business groups were also keen to take advantage of this scheme, while noting the impact of the additional cost on smaller exporters.