Trump hails lopsided Asian trade deals

Donald Trump says new trade deals will create thousands of US jobs, while Asian leaders struggle to sell the punitive new tariff imposts as wins to sceptical domestic audiences.

US President Donald Trump speaks alongside Filipino President Ferdinand Marcos Jr during a meeting in the Oval Office Picture: AFP

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Donald Trump announced trade agreements with The Philippines and Japan late on Tuesday (local time), which – along with details of a lopsided tariff deal with Indonesia – have exposed the gulf in negotiating power between developing and developed economies as the US President’s August 1 tariff deadline looms.

While a Japanese delegation secured a 15 per cent tariff on imports into the US, 10 per cent less than Mr Trump’s proposed tariff rate, in return for $US550bn ($836bn) in investments, Philippines President Ferdinand “Bong Bong” Marcos carved just 1 per cent off the threatened 20 per cent tariff on Tuesday, despite the two countries’ strong security ties and close alignment on China.

“He’s a very tough negotiator,” Mr Trump joked with reporters during the oval office meeting with The Philippines leader which ended with him agreeing to a 19 per cent tariff on all imports into the US, the same rate negotiated with Indonesia.

Mr Trump later said on Truth Social the two sides had con­cluded a trade deal “whereby The Philippines is going OPEN MARKET with the United States, and ZERO Tariffs”.

Ahead of his visit, Mr Marcos said his priorities were to push for greater economic engagement with the US and to “alleviate the effects of a very severe tariff schedule on The Philippines”.

But he will struggle to sell the deal domestically as a win for his government, given the 19 per cent tariff is still higher than the original 17 per cent proposed for The Philippines in April, which was later raised to 20 per cent.

The Philippines – a staunch US security ally which allows the US access to nine military bases – has borne the brunt of Chinese territorial aggression in the South China Sea. Crisis Group Philippines researcher Georgi Engelbrecht told The Australian some critics were already painting the deal as a defeat for the Marcos ­administration, claiming he had walked away with nothing in return for his concessions.

Japan's Prime Minister Shigeru Ishiba explains the contents of the Japan-US tariff agreement to reporters, at the prime minister's office in Tokyo Picture: AFP

“But it could have been much worse, not only the deal itself but the meeting, because we all know how President Trump can be,” Mr Engelbrecht said. “There will be disappointment but it’s unlikely to be perceived as a fiasco.”

The Philippines’ annual exports to the US amount to less than half a per cent of the total value of all shipments into the US annually, and the main aim of its negotiators was to ensure it did not fare worse than its Southeast Asian neighbours. Vietnam, the first ASEAN nation to strike a deal, faces a 20 per cent impost on all goods into the US.

Manila also appears to have so far dodged pressure faced by other allies to lift defence spending. In a meeting with Mr Marcos, US ­Defence Secretary Pete Hegseth reiterated US commitment to the two countries’ mutual defence treaty, which extended to “armed attacks on our armed forces aircraft or public vessels, including our coastguards anywhere in the Pacific including the South China Sea”.

US Secretary of Defense Pete Hegseth during his with Ferdinand Marcos Jr at the Pentagon, Picture: AP

Cato Institute economist Kyle Handley said deals struck with The Philippines, Vietnam and Indonesia showed the US administration was able to “push around some of these Southeast Asian countries … to accept Donald Trump’s terms” while stronger economies such as China, the EU, Canada and Mexico continued to resist finalising deals on tariffs.

Fresh details released by the White House of its trade deal with Indonesia reveal 99 per cent of US industrial, food and agricultural products will enter Indonesia impost-free in exchange for an agreed tariff on Indonesian goods of 19 per cent, down from a proposed 32 per cent in April.

Greater access for US agricultural producers inevitably raises potential risks for Australian agricultural exporters who continue to face significant non-tariff barriers to the huge Indonesian market despite the 2020 Indonesia Australia Comprehensive Economic Partnership Agreement.

Under the US agreement, Jakarta must also remove restrictions on exports of Indonesian critical minerals to the US (threatening an export ban on raw nickel designed to encourage domestic mineral processing), exempt US goods from local content rules, and buy $US3.2bn worth of Boeing planes, $US4.5bn in soybean, wheat and cotton and $US15bn in LPG and crude oil.

Presidential communications office spokesman Fithra Hastiadi insisted on Wednesday the deal was a “win-win” for both countries and Indonesia could still negotiate lower tariffs on some products, while the Indonesian Employers Association said a lower tariff on labour-­intensive textiles and footwear was critical to the survival of those industries.

But economist Dandi Rafitrandi told the Jakarta Foreign Correspondents Club there was still huge uncertainty around the terms of the deal, including on rules of origin to stamp out Chinese attempts to ship relabelled products to the US via Indonesia.

“It’s the heart of the issue and it’s going to be difficult for Indonesia in the future, (determining) whether a product is from Indonesia”, he said.

The Asian Development Bank has downgraded its growth forecasts for economies in developing Asia and the Pacific this year and next year to 4.7 and 4.6 per cent respectively (down 0.2 per cent), driven by expectations of reduced exports amid higher US tariffs, global trade uncertainty, and weaker domestic demand

ADDITIONAL REPORTING: DIAN SEPTIARI