Cambodia Under Pressure: When the Bet on Exports Becomes a Systemic Risk
- Brèves Éco
- 11 hours ago
- 5 min read
Within the ASEAN+3, Cambodia appears as the economy most exposed to the commercial tightening by the United States, both through the structure of its exports and by its degree of dependence on final American demand. In an environment where every additional tariff point can translate into job losses and squeezed margins, the Cambodian model of export-driven industrialization faces a resistance test of unprecedented scale.
An Unusually High Dependence on the United States
The United States absorbs an exceptionally high share of Cambodian exports, much more than for most other ASEAN+3 economies, placing Phnom Penh among the countries most dependent on this market, led by textiles and discretionary consumer goods.
This dependence is all the more worrying as the report shows that Cambodia combines both a heavy weight of the United States in its external sales and a basket of products among the most sensitive to price variations induced by tariffs.
In 2024, Cambodia is ranked as the economy most vulnerable to American tariff shocks when crossing direct exposure (share of exports to the United States) and the "elasticity" of its product mix. In other words, a given tariff shock statistically has a higher chance to translate into a drop in exported volumes to Cambodia than in any other country in the region.
A Highly Elastic Export Basket
The core of the Cambodian risk lies in the very nature of what the country exports: goods easy to substitute for American consumers. Economists from the report use import demand elasticities to measure how volumes react to a price increase; products with high elasticity see their sales sharply decline when costs rise, notably due to tariffs.
In this context, Cambodia stands out with an export mix to the United States particularly concentrated on highly elastic products. In 2024, its top five export items to the US are dominated by consumer goods and industrial components very sensitive to prices:
Les « travel goods » (bagages, sacs, maroquinerie, etc., code HS4 4202) (travel goods - luggage, bags, leather goods, etc., HS4 code 4202) represent 14.1% of exports to the United States, with an estimated elasticity of −3.0, meaning that a relative price increase quickly results in a sharp decline in volumes.
Semiconductor devices and LEDs (HS4 8541) account for 10.6% of exports, with an elasticity of −4.8, illustrating intense international competition in these value chains.
Pullovers, sweatshirts, and similar knitted articles (HS4 6110) make up 7.0% of sales to the American market, with an elasticity of −4.9, typical of textile products with low differentiation.
Lighting fixtures and equipment (HS4 9405) represent 5.9% of flows to the US, with an elasticity of −3.3.
New rubber tires (HS4 4011) account for 5.7% of American exports from Cambodia, with an even stronger elasticity of −8.0.
Together, these five items concentrate nearly 43% of Cambodian exports to the United States, with elasticities all higher in absolute value than 3, a level considered very sensitive in international trade literature.
This configuration means that a lasting increase in US tariffs could quickly provoke brutal adjustments, in the form of lost volumes or margin compressions if producers try to absorb the shock by lowering their factory gate prices.
Cambodia, an "Extreme Case" in the Region
The authors go further by constructing synthetic vulnerability indicators, crossing weighted average elasticity by product, US share in exports, and domestic value-added embedded in flows to this market. On this basis, Cambodia systematically ranks at the top of the risk spectrum: it shows both the highest trade-weighted elasticity for exports destined to the US and one of the highest degrees of dependence on final American demand.
"Trade-at-risk" charts show that Cambodia, along with Vietnam, forms the hard core of economies considered high risk in ASEAN+3, but with an important nuance. While Vietnam shows strong exposure in nominal value, its share of domestic value added in what is sold to the US remains lower, reflecting a more downstream role in value chains, fueled by many imported inputs.
In contrast, Cambodia is essentially an exporter of labor-intensive finished products, where local value added is significant, amplifying the domestic impact of any decline in American orders.
Global Value Chains: A Double-Edged Sword
The report recalls that part of ASEAN+3's trade with the United States occurs via global value chains, with a complex distribution of value added between countries. While Cambodia does not reach the level of integration of the large electronic or automotive platforms in the region, it nevertheless participates in specific segments, especially through semiconductors and electronic components (HS4 8541), already cited among its top export items to the US.
AMRO's authors show that economies with a large share of gross exports corresponding to domestic value added ultimately destined for the US consumer are the most exposed in value chain perspective. On this indicator, Cambodia again ranks among the most vulnerable countries, with most local value creation in clothing, leather goods, and lighting goods directly linked to American demand.
In short, Cambodia is not merely a marginal assembly country; it assumes a substantial share of the final value added in targeted sectors, making any external shock particularly costly in terms of income, jobs, and tax revenues.
A Model That Urgently Needs Rebalancing
The diagnosis set by this analytical note is unambiguous: Cambodia has built a successful export-driven industrialization model, but one anchored on a narrow base—some very elastic product categories, mainly destined for a single large market. In a world increasingly fragmented geopolitically, this bet is becoming less and less sustainable without profound adaptations.
Three main axes emerge in light of the figures presented:
Diversify markets to reduce the US share in exports, leveraging regional agreements and growing outlets in Asia and Europe.
Recompose the export basket towards products with lower elasticity—whether more technical segments in textiles, intermediate components, or industrial niches where price is not the sole criterion.
Raise the technological content and sophistication of local productions to gradually shift to categories of goods where cost competition is less direct and differentiation allows easier absorption of cost increases related to tariffs or standards.
Between Risk and Opportunity
This rise in risks should not be read only as a threat but also as a strong strategic alarm signal for Cambodia. The quantified alert represented by this classification as a "high-risk" economy can serve as a political lever to accelerate already identified reforms: industrial upgrading, improving the business climate, strengthening logistics infrastructures, and vocational training.
While ASEAN+3 as a whole sees its commercial integration model questioned by the volatility of American trade policy, Cambodia finds itself more than any other cornered. How Phnom Penh manages to transform this potential shock into a vector for diversification and modernization will largely determine the resilience of the Cambodian economy for the coming decade.
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