Economy & Opinion: Cambodia faces US tariff storm, textile sector at crossroads

In a context that is causing waves in the industrial strongholds of Southeast Asia, the United States will impose tariffs of 36% on all Cambodian exports, particularly textiles and footwear, starting on 1 August 2025. Arnaud Darc reacts live on TV5 Monde.

Speaking live from Phnom Penh on TV5MONDE, Arnaud Darc, a key representative of the Cambodian private sector, did not mince his words

Announced as part of a radical new protectionist shift in Washington, this unilateral increase has plunged Cambodian industrial leaders, foreign investors and thousands of workers into great uncertainty about the future of the kingdom's export-dependent growth model.

Six months after returning to the White House, President Donald Trump has set the tone with a powerful mix of executive assertiveness and a highly aggressive trade stance.

These new tariffs, which extend well beyond Cambodia to affect Europe, Canada, Latin America and Asia, are the latest in a relentless quest for trade advantages for the United States. However, among smaller economies, few are feeling the shock more acutely than Cambodia, whose prosperity is closely linked to exports of clothing and footwear to retail giants across the Pacific.

‘This is not a protective tariff, but a breakaway tariff.’

Speaking live from Phnom Penh on TV5MONDE, Arnaud Darc, a key representative of the Cambodian private sector, did not mince his words: ‘Thirty-six per cent is not a protective tariff, it is a breakaway tariff.’

 He drew a clear distinction, pointing out that Cambodia, unlike many of its competitors, has never received significant subsidies and that its factories operate transparently, in compliance with international regulations and codes of conduct.

Negotiations with Washington are continuing, Mr Darc confirmed. The Cambodian authorities are working tirelessly to secure a reduction to 25%, which would at least allow their industries to remain competitive with their regional neighbours, Vietnam, Indonesia and Bangladesh.

However, at present, the 36% rate remains in force, and Mr Darc warns that its scale threatens to ‘disconnect’ Cambodia from key global value chains.

A vital economic artery under threat

The scale of the risk is considerable. In 2024, exports to the United States accounted for 42% of Cambodia's total foreign trade, worth more than $9 billion. In the textile, travel goods and footwear sectors, this dependence is even greater, accounting for up to 70% of shipments. These figures are not abstract: behind them are nearly 850,000 direct factory workers, most of whom are women, as well as countless dependents.

Cambodia has built a reputation as a reliable and ethical supplier, producing more than 200 million T-shirts, 60 million pairs of shoes and 50 million travel bags for US stores every year. Today, this lifeline is at risk of being cut, with wider repercussions for livelihoods and domestic stability.

Immediate consequences for consumers and workers

The concrete effect of these tariffs is brutal, explains Darc:

• A T-shirt that used to cost $5 now costs $6.80

• A bag costing $15 now costs $20

• Trainers have gone from cost $22 to $30

These essential products are vital to American consumers on a daily basis, turning a policy aimed at foreign producers into what Mr Darc describes as an ‘invisible tax’ on American household budgets. At the same time, up to 100,000 Cambodian jobs are immediately at risk, with another 250,000 vulnerable if production is relocated. The first warning signs are already visible: order suspensions, temporary factory closures and families falling into poverty.

Mr Darc criticised the logic behind the tariffs, saying they inflict a ‘double blow’ by penalising both US importers and Cambodian workers without rebuilding equivalent production capacity in the United States. ‘This is a disguised tax, not an industrial strategy,’ he said.

US textile prices have fallen by 50-70% over the past 30 years, helping to fund advances in healthcare, education and technology in the US. The new tariffs threaten to end this momentum, but, as Mr Darc points out, the US textile manufacturing economy, hampered by labour costs ten times higher than in Cambodia, makes ‘reshoring’ little more than a pipe dream.

A message to foreign investors

This policy change has naturally caused concern among French and European companies operating in Cambodia. Mr Darc's response is both frank and measured.

He believes that investors deserve to be told the truth: the crisis is serious, but Cambodia remains a reliable, flexible, stable and responsive industrial base.

The government is actively working to reduce logistics and energy costs, diversify its markets and maintain its trade relations with the European Union, Japan and the Middle East.

Cambodia is also accelerating the modernisation of its industry through improved traceability, international certification and product sophistication. A special forum ensures ongoing consultation between the private sector and the government, helping to develop strategies to weather the storm.

Beyond the crisis: adapt, don't retreat

In summary, Mr Darc presented Cambodia not as a victim, but as a nation ready to take on challenges.

‘This is a country that does not run away from crises, it goes through them,’ he said, signalling his determination to emerge not only unscathed but transformed by adversity.

As the countdown to 1 August begins, the fate of Cambodia's textile sector, and with it the livelihoods of hundreds of thousands of people, hangs in the balance.

With the eyes of the world watching, the final impact of the new US trade position will be felt not only in quarterly figures or boardrooms, but also in the daily reality of workers from Phnom Penh to Arkansas. Whether dialogue with Washington will bring relief or mark a turning point in the restructuring of the global manufacturing industry remains an open question at the heart of this trade storm.