Cambodia & Economy: The effects of Trump's announcement on Cambodian exports

US President Donald Trump's announcement of 49% tariffs on Cambodian goods sent shockwaves through Cambodian exporters.

Donald Trump

These tariffs, the highest among the new tariffs imposed on several countries, are part of Mr Trump's ‘reciprocal tariffs’ policy aimed at ‘correcting perceived trade imbalances and retaliating against high tariffs imposed on US goods abroad’.

Economic impact on Cambodia

The United States is Cambodia's largest customer, accounting for nearly 38% of its total exports. In 2024, Cambodia exported $9.92 billion worth of goods to the United States, mainly clothing, travel goods and footwear, industries that employ around 800,000 workers. The new tariff threatens to disrupt this key trading relationship, which could clearly lead to a decline in orders from American buyers and job losses in the Cambodian manufacturing sector.

The Cambodian Ministry of Commerce has expressed scepticism about the justification for the tariffs, challenging Trump's claim that Cambodia would apply a 97% tariff on US imports. Officials say the real average rate is closer to 29.4%.

Despite these concerns, Cambodian authorities and industry leaders remain cautiously optimistic, suggesting that negotiations with the US could mitigate the impact and emphasising diversification efforts targeting European and ASEAN markets.

Trump's justification

President Trump presented the tariffs as necessary to protect American workers and industries from what he described as ‘decades of exploitation by foreign nations’. He specifically accused countries such as Cambodia and Vietnam of acting as hubs for the transhipment of Chinese goods in order to evade existing US tariffs.

The US administration claims that the new rates are roughly half of what these countries impose on US goods, presenting them as a fair response to unbalanced trade practices.

Cambodian options

If these measures are applied, Cambodia will then have to intensify its efforts to diversify its export markets beyond the United States. Analysts believe that Cambodia can develop its trade with Europe, Canada, the United Kingdom and the ASEAN countries, which could reduce its dependence on the US market.

Cambodia could also focus more on strengthening its position within the framework of regional trade agreements, such as the ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP), in order to improve trade with neighbouring countries.

Cambodia could also enter into direct negotiations with the United States to reduce or eliminate these tariffs. The Cambodian government has expressed confidence that the problem can be resolved through dialogue.

The Kingdom could also take advantage of its membership in international organisations such as the World Trade Organisation (WTO) to negotiate more favourable trade conditions. This would involve invoking WTO rules or initiating discussions within the framework of trade relations between ASEAN and the United States.

Faced with the challenges posed by US tariffs, Cambodia could seek to leverage its competitive advantages in labour-intensive industries such as textiles and footwear to attract investment and trade from other regions.

In short, US tariffs are likely to push Cambodia to diversify its trade relations, strengthen its regional partnerships and engage in strategic negotiations to mitigate the impact of these tariffs.