President Donald Trump has announced new trade agreements with the Philippines and Indonesia. These deals come just days before an August 1 deadline set by the Trump administration, after which higher tariffs were threatened.
Thank you for reading this post, don't forget to subscribe!Key Takeaways from the Agreements
- Philippines Trade Deal: Following a White House meeting with Philippine President Ferdinand Marcos Jr., Trump announced a framework agreement. Under this, the US will apply a 19% tariff rate on Philippine goods, a slight reduction from the 20% previously threatened for August 1, but still higher than the 17% reciprocal tariff announced in April. In return, the Philippines will open its market to US goods with zero tariffs. The leaders also emphasized closer military cooperation between the two treaty allies, particularly in light of China’s increasing assertiveness in the South China Sea, where Manila and Beijing have ongoing disputes over areas like the Scarborough Shoal.
- Indonesia Trade Deal: The agreement with Indonesia outlines a comprehensive framework aimed at significantly boosting bilateral economic ties. Indonesia has committed to eliminating tariffs on over 99% of US goods, covering a wide range of sectors from agriculture and technology to automotive and chemicals. They will also remove non-tariff barriers, including local content requirements and accepting US vehicle safety standards. The US, in turn, will lower its threatened tariffs on Indonesian products from 32% to 19%. However, certain goods suspected of being transshipped from higher-tariff countries could still face a 40% tariff. This deal is anticipated to be a “huge win” for American industries, with Indonesia also agreeing to major purchases of US products, including over $3 billion in aircraft, $4.5 billion in agricultural goods, and $15 billion in energy products.
These announcements underscore the Trump administration’s strategy of engaging in bilateral trade negotiations to secure more favorable terms for the US and diversify supply chains, often leveraging the threat of higher tariffs to prompt agreements.
