How Cambodia Will Be Impacted by the USA’s New Global Tariffs.
On April 3, 2025, US President Donald Trump announced a sweeping increase in global tariffs, calling it “American Liberation Day.” The policy is meant to boost the US economy by imposing higher tariffs on imports from various countries. Unfortunately, Cambodia is among the hardest-hit nations, facing a hefty 49% tariff on its exports to the United States.
So, what does this mean for Cambodia? Let’s break it down.
1. Cambodian Exports Face an Uphill Battle
The United States is a key export market for Cambodia, particularly in sectors like textiles, footwear, and agricultural products. With a 49% tariff, these goods will become significantly more expensive for American buyers, potentially reducing demand. This could hurt Cambodian manufacturers, exporters, and the thousands of workers who rely on these industries.
In 2024, trade between Cambodia and the United States exceeded $10 billion, marking an 11% increase compared to 2023.
Cambodia’s exports to the U.S. reached $9.9 billion, growing by over 11%.
According to data from the General Department of Customs and Excise of Cambodia, the United States remains Cambodia’s largest export market.
2. Job Losses and Economic Struggles
The garment industry is one of Cambodia’s largest employers, providing jobs for over 930,000 workers, many of whom are women. If American companies reduce their orders due to high tariffs, factories may struggle to stay afloat, leading to job cuts and economic instability.
The US market is a key revenue source for Cambodia’s garment, footwear, and travel goods (GFT) sector, which saw exports rise 50 percent to $14 billion last year. Minister Heng Sour highlighted the industry’s significance at the 2025 Textile Summit, noting 1,608 factories employing over 930,000 workers and its crucial role in Cambodia’s economy.
3. Diversification Becomes More Urgent
With the US market becoming less viable, Cambodian businesses may need to look elsewhere for trade opportunities. The country could strengthen ties with China, the European Union, or regional partners like Thailand and Vietnam. However, shifting trade routes takes time, and in the short term, businesses will likely face financial difficulties.
4. Potential Price Increases for Consumers
Many Cambodian businesses import raw materials or equipment from the US. If Cambodia retaliates with its own tariffs, it could lead to increased costs for locally produced goods. This means everyday Cambodians might have to pay more for essential products.
Dr. Pa Chanroeun, Researcher, Political Analyst, Human Rights and Democracy Advocate, and President of Cambodian Institute for Democracy expressed his point of view on his facebook page that:
Why Did the Trump Administration Impose New Import Tariffs on Many Countries?
A few hours ago, the Trump administration announced new import tariffs on several countries worldwide, with Cambodia facing the highest tariff rate at 49%. The increase in import tariffs is driven by several key factors:
- Economic Factors and Trade Deficit – The United States aims to reduce its trade deficit by making foreign goods more expensive, thereby encouraging domestic production and consumption. Additionally, the U.S. seeks to push other countries to increase their imports from the U.S. to help balance trade.
- Protection of Domestic Industries – Higher tariffs are intended to shield American industries from foreign competition, particularly in sectors like steel, aluminum, and manufacturing.
- Strengthening Bargaining Power – Trump uses tariffs as a negotiating tool to secure better trade agreements, ensuring more favorable conditions for U.S. exporters.
- Nationalist Economic Policies – The tariff hikes align with Trump’s “America First” economic strategy, which prioritizes strengthening U.S. industries and creating domestic jobs.
- Geopolitical and International Trade Strategy – Tariffs are used as an instrument of geopolitical influence, pressuring trading partners to align with U.S. strategic interests. They also serve as leverage against geopolitical rivals and as a means to push countries to improve human rights, democracy, and governance practices.
5. A Global Trade War?
Experts fear that these tariff increases could spark a wider trade conflict, with countries imposing retaliatory measures. If global supply chains are disrupted, Cambodia, as an export-dependent economy, could suffer even more setbacks.
6. Could Cambodia See More Foreign Direct Investment?
Interestingly, some experts believe that Trump’s tariffs could also have a silver lining for Cambodia by diversifying its sources of Foreign Direct Investment (FDI). Dr. Jayant Menon, a visiting senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, suggests that as the trade war shifts focus from “Made in China” to “Made by China,” non-Chinese investors currently in China or Vietnam may look to Cambodia as an alternative.
He emphasizes that while Chinese FDI might not increase due to Trump’s broader trade policy shift, Cambodia could attract investment from other global players looking to move out of China. This could help reduce Cambodia’s heavy dependence on a single country and build economic resilience. However, to take advantage of this opportunity, Cambodia must focus on economic diversification, infrastructure improvements, and workforce skill development to remain competitive in the region.
What Can Cambodia Do? How Will Cambodia Survive a 49% US Tariff?
This morning, Trump announced 49% tariffs on Cambodia. If not aggressively addressed within the next couple weeks, this will destroy the Cambodian economy and create a deep economic recession, a loss of several hundred thousand jobs in a country with a population of only 17 million, social instability, and rapid capital outflow. Manufacturers in Cambodia will be urgently pleading with the government to take immediate action. Cambodia only imports $350 million of goods from the U.S. It would cost almost nothing to the Cambodian government to allow all US goods to be imported tariff-free and quickly provide licenses to U.S. businesses such as Starlink. The Cambodian government needs to make a bold gesture, quickly, said Casey Barnett, CFA, FCCA, President of The American Chamber of Commerce in Cambodia Association (AmCham) and of CamEd Business School.
He warned that if the issue is not addressed seriously this week, it could devastate Cambodia’s economy, leading to a severe economic crisis, massive job losses, social instability, and rapid capital outflows. He noted that Cambodia imports only $350 million worth of goods from the United States, meaning it would cost the Cambodian government relatively little to allow all U.S. goods to be imported duty-free and to expedite business licenses for American companies like Starlink. He urged the Cambodian government to take bold and swift action.
While this news is concerning, Cambodia has several options:
- Negotiation & Diplomacy: Cambodian leaders can engage with US officials to seek exemptions or reductions in tariffs, as other countries may also try.
- Trade Diversification: Expanding trade partnerships with other nations, including ASEAN neighbors, China, and Europe, could soften the blow.
- Boosting Domestic Production: Encouraging local industries and reducing reliance on exports may help stabilize the economy in the long run.
- Improving Workforce Skills & Infrastructure: Investing in education, skills training, and logistics could help Cambodia attract more diverse foreign investors.
“Oh look at Cambodia, 97 percent, we are gonna make it down to 49 percent. They made a fortune with the United States of America,” Trump said in a video posted on social media.
The main trading partners that will receive these special tariff rates are:
– European Union: 20%
– China: 34%
– Vietnam: 46%
– Thailand: 36%
– Japan: 24%
– Cambodia: 49%
– South Africa: 30%
– Taiwan: 32%
In addition, the countries where the US will impose a basic tariff of 10%, which will take effect on April 5, include:
– United Kingdom
– Singapore
– Brazil
– Australia
– New Zealand
– Turkey
– Colombia
– Argentina
– El Salvador
– United Arab Emirates
– Saudi Arabia
Final Thoughts
There’s no doubt that Trump’s new tariffs will challenge Cambodia’s economy. However, the country has shown resilience before and can navigate these hurdles through strategic planning and strong international partnerships. Businesses, policymakers, and consumers alike must prepare for changes in trade, but with the right approach, Cambodia can adapt and thrive.
What do you think about these new tariffs? Let us know your thoughts!