Salceda Optimistic: PH FTA with US Trade Deal
Philippines Eyes US Free Trade Agreement Following Marcos Jr.’s White House Summit
Manila, Philippines – Economist Joey Salceda expressed strong optimism that the Philippines is on the cusp of securing a Free Trade Agreement (FTA) with the United States, following President Ferdinand Marcos Jr.’s recent White House meeting with US President Donald Trump. The sentiment stems from a proposed zero-tariff plan for select American goods entering the Philippines, a move Salceda believes signals a notable opening for a broader bilateral trade pact.
Salceda highlighted that President Marcos jr.’s offer of zero tariffs on certain US imports serves as a direct invitation for an FTA.”When Marcos said we are offering you zero tariffs, that is an invitation we can do an FTA,” Salceda stated at a news forum in Quezon City. He further elaborated that President Trump’s current inclination towards bilateral trade discussions, rather than solely multilateral partnerships, makes the prospect of an FTA more attainable.
The former lawmaker recalled the Philippines’ inability to join the Trans-pacific Partnership (TPP) under the Obama governance due to constitutional restrictions on foreign land ownership, a hurdle that does not impede bilateral negotiations.
Recent trade developments indicate a dynamic negotiation landscape. President Trump announced a new 19% tariff rate for Philippine goods entering the US, a reduction from a previous 20% announcement but an increase from the 17% rate communicated in April.Initially, Trump suggested an “open market” scenario with zero tariffs for the US while the Philippines would impose a 19% tariff.
However, President Marcos Jr. has since clarified that the zero-tariff offer on US products is specifically targeted at certain sectors, such as automobiles. The President also committed to increasing imports of vital US commodities, including soy, wheat, and pharmaceuticals.
Frederick Go, the Special Assistant to the President for Investment and economic Affairs, confirmed that sensitive agricultural and fisheries commodities for the local sector are excluded from the zero-tariff scheme offered to the US.
Salceda further analyzed the tariff implications, noting that only 31% of Philippine exports are subject to the 19% US tariff. The majority of Philippine exports, including electronics, wood, metals, fuels, and chemicals, benefit from exemptions under various existing trade agreements. Consequently, Salceda calculated the effective tariff rate to be approximately 6.3%, a figure he considers favorable to the philippines.
An FTA with the US, according to Salceda, would yield ample benefits for the Philippines, leading to more affordable products for consumers and a surge in investments from American firms. “Definitely, from tariff savings alone there will be higher consumer welfare aside from the creation of jobs from new investments in manufacturing,” he asserted.
Trade data underscores the meaning of the US-Philippines economic relationship. In 2024, US goods trade with the Philippines reached $23.5 billion. US goods exports to Manila totaled $9.3 billion, while imports from the Philippines amounted to $14.2 billion, resulting in a $4.9 billion trade-in-goods deficit for the US, marking a 21.8% year-on-year increase.
The Philippine Statistics Authority (PSA) data further illustrates the US’s importance as a trading partner, identifying it as the Philippines’ top export destination in 2024.The US accounted for 16.6% of the Philippines’ total export receipts, valued at $12.14 billion out of $73.27 billion.