Trump’s Tariffs: Will the Pros Outweigh the Cons?
By: Atty. Julia Antoinette S. Unarce
In various instances, United States (U.S.) President Donald Trump has declared that “tariff is the most beautiful word in the dictionary.” During his presidential campaign, Trump consistently advocated for the imposition of tariffs as a key component of his global policy strategy. True enough, in April 2025, President Trump imposed a 10% tariff on all countries, along with individualized reciprocal tariffs on nations with which the U.S. has the largest trade deficits. This move aimed to level the playing field and protect national security against what he described as unfair foreign trade practices. While the implementation of the increased tariffs remains suspended for a period of ninety (90) days for select countries, discussions regarding their imminent effects are still ongoing.
But first things first—what exactly is a tariff, this so-called “most beautiful word in the dictionary”? A tariff is essentially a schedule or catalogue listing various types of merchandise, along with the corresponding duties or customs imposed upon their importation into a country. Simply put, tariffs are taxes levied by a government on imported goods. In the Philippines, tariffs are typically set by Congress through legislation. Additionally, Congress may authorize the President to adjust tariff rates within specific limits and under certain conditions.
Tariffs are designed to protect local products from foreign competition, thereby discouraging overreliance on imports. In fact, tariff wars are not new to the U.S. As early as 1930, the Smoot-Hawley Tariff Act was passed, raising import duties to protect American businesses and farmers during the Great Depression. The Smoot-Hawley Act increased the average tariff to 20%, which prompted retaliation from 25 foreign governments and contributed to the failure of several foreign banks. It is now widely blamed for exacerbating the effects of the 1929 Great Depression.
Such phenomena are not new, but the effects of tariff increases remain far-reaching. Under Trump’s strategy, China faced a substantial tariff hike—from 20.8% to 145%—though a temporary truce was reached on May 12, 2025, which brought the rate down to a reduced level. This is expected to have a significant impact, especially since Chinese goods account for 13.4% of total U.S. imports.
Beyond protecting domestic industries, some economists argue that tariffs can lead to increased job creation. Foreign companies seeking to avoid the burden of tariffs may relocate their operations to the tariff-imposing country, resulting in more local jobs and economic opportunities. Furthermore, higher tariff rates generate additional government revenue. According to projections, Trump’s 10% universal tariff could bring in approximately $400 billion in new tax revenue each year.
On the other hand, critics argue that tariffs introduce inefficiencies into the economy—chief among them, inflation. Roughly 10% of U.S. consumption is sourced from goods and services imported from abroad, and the prolonged imposition of high tariff rates could spike the core inflation rate to 4%. This is due to the increased costs faced by importers, leading them to raise the prices of imported goods and effectively passing the burden on to consumers. Moreover, Trump’s tariffs have triggered retaliatory measures from affected nations, with China imposing a 125% tariff on U.S. goods and Canada implementing a 25% tariff on select products. Economists warn that such retaliation could shrink projected revenue gains to just $1.5 trillion. The announcement of increased tariffs has also created uncertainty, resulting in global companies to delay investments and other major decisions in the hopes of attaining clarity. Ultimately, American consumers may bear the brunt of these price increases on everyday items.
The Philippines has not been spared from this wave of tariff hikes, facing an additional 17% levy on its exports to the U.S. However, Finance Secretary Ralph Recto sees this as an opportunity: the Philippines’ relatively lower tariffs compared to its Southeast Asian neighbors could attract more foreign investments. On the other hand, some economists remain skeptical, warning that higher tariffs could slow the country’s economic growth by half a percent due to decreased export activity to the U.S. While this concern is valid, the Philippines is now increasingly being viewed as a viable alternative to China for manufacturing investments. Nonetheless, this poses its own challenges, particularly due to the country’s relatively underdeveloped infrastructure and uncertain regulatory environment compared to its regional peers.
At any rate, while President Trump aims to strengthen American industries and promote U.S.-made goods, tariffs remain a double-edged sword. The policy carries both potential benefits and drawbacks, and much depends on the administration’s readiness to face the consequences if the cons outweigh the pros. President Trump’s “America First” policy may either reinforce the U.S.’ position as an economic powerhouse—or prove detrimental to the American consumer, who may end up shouldering the real cost of the tariff program.
But one thing remains certain: we live in a globally interconnected economy, where neither superpowers nor developing nations can act in isolation. While economic protectionism may seem a noble and nationalistic stance, the present global landscape compels nations to collaborate in addressing the complexities of globalization, rising consumer demands, and evolving economic power dynamics.
Julia Antoinette S. Unarce is a Junior Associate at the Firm and a member of its Litigation, Data Privacy, Anti-Money Laundering, and Environmental, Social, and Governance (ESG) Departments.
Her practice spans a broad range of legal matters, including civil, criminal, and administrative cases. She actively represents clients before courts and administrative agencies, and is involved in the negotiation, settlement, and pre-litigation resolution of disputes.
In addition to litigation, she provides advisory services on evolving regulatory frameworks, assisting clients with business formation, compliance with reportorial obligations, policy development, and other corporate and regulatory matters.
