The recent imposition of sweeping U.S. tariffs under former President Donald Trump’s renewed protectionist approach has sent shockwaves through the global economy, with Cambodia emerging as the most heavily affected country in Southeast Asia. While the move had been anticipated in some circles, the severity of the tariff—set at 49 percent on Cambodian imports—came as a surprise. It marks a dramatic escalation in the ongoing recalibration of U.S. trade policy, especially toward countries with which the U.S. holds large trade deficits. Although the calculated tariff rate, based on trade imbalance and import elasticity, approached nearly 97.5 percent, the U.S. government capped it at 49 percent.
For Cambodia, the implications are immediate and severe. The United States is its single largest export destination, with 2024 exports to the U.S. totaling nearly $10 billion, an 11 percent increase from the previous year. This accounts for the vast majority of the $10.18 billion bilateral trade volume. The new tariff threatens to reverse much of this growth. Cambodia’s export industries, particularly in garments, footwear, and low-margin manufacturing, are expected to be hit hardest. Casey Barnett, President of the American Chamber of Commerce in Cambodia, and President of CamEd Business School (ItaCham member) warned that the impact will be swift. Orders may be canceled, planned investments shelved, and manufacturers forced to scale back. “This is an unprecedented and damaging measure,” he said on the Khmer Times. “The only way to resolve this crisis without long-lasting harm is through immediate diplomatic engagement with the U.S. Trade Representative.”
The Cambodian government has responded with urgency. The Ministry of Economy and Finance has tasked a working group with evaluating the tariff’s potential consequences and crafting policy measures to preserve economic competitiveness and safeguard jobs. While the ministry works on its economic response, many experts believe diplomacy must also be a central pillar of Cambodia’s strategy.
Former Ambassador Pou Sothirak, Senior Advisor at the Cambodia Centre for Regional Studies (CCRS), noted that there remains a brief window for negotiation before the tariffs come into effect on April 9. He suggested that Cambodia could consider offering reciprocal benefits—such as reduced tariffs on U.S. goods—as a gesture to encourage concessions from Washington.
While some in Cambodia are calling for calm and a wait-and-see approach, others recognize the structural vulnerability this situation reveals. Cambodia’s overreliance on the U.S. market has long been acknowledged, but efforts to diversify export destinations have not yet borne significant results. In another article of the Khmer Times, Dr. Jayant Menon, a senior fellow at Singapore’s ISEAS-Yusof Ishak Institute, warned against retaliatory tariffs, which would likely do more harm to Cambodia than the U.S. Instead, he called for a pivot toward economic diversification and regional diplomacy.
Despite the economic tensions, analysts believe the broader diplomatic relationship between the U.S. and Cambodia may remain intact. Chheng Kimlong, President of the Asian Vision Institute (AVI), pointed out that Cambodia’s foreign policy favors neutrality and pragmatic bilateralism. Nevertheless, prolonged economic distress could spill into the political arena, especially if the public begins to feel the pain through job losses and reduced investor confidence.
Youk Chhang, Executive Director of DC-Cam, emphasized that the real target of the Trump administration’s move may not be Cambodia itself but Chinese investments operating within the country. “When elephants fight, it is the grass that suffers,” he said, implying that Cambodia is merely collateral damage in a broader U.S.-China rivalry.
Cambodia’s business leaders, while acknowledging the severity of the tariff, are urging patience. Lim Heng, Vice President of the Cambodia Chamber of Commerce, said it would be premature to draw final conclusions before the tariffs take effect. He noted that similar past events, such as the EU’s partial withdrawal of EBA privileges, sparked concern but had more limited long-term impacts than initially feared. He also pointed out Cambodia’s expanding trade network—including agreements with China, South Korea, the UK, and members of the Regional Comprehensive Economic Partnership (RCEP)—as potential avenues to offset losses from the U.S. market.
Still, the road ahead will be difficult. Cambodia’s economic model, heavily dependent on exports and foreign investment, is vulnerable to external shocks like the one now unfolding. While diversification and regional diplomacy may offer long-term resilience, in the short term, the Kingdom faces an uphill battle to maintain growth, protect jobs, and avoid political instability. The decision by the Trump administration is not just a tariff hike—it is a test of Cambodia’s economic flexibility, diplomatic agility, and strategic foresight. How the country responds over the coming weeks may define its trajectory for years to come.
Also, Anthony Galliano, Vice President of AmCham, and CEO of ItaCham member Moores Rowland (Cambodia) Co. Ltd.., talking about this on B2B Cambodia, mentioned that the Trump administration has claimed the tariffs are aimed at addressing unfair trade practices, although they are expected to lead to higher prices for American consumers and slow economic growth. Cambodia faces the highest tariff rate at 49%, followed by Laos at 48%, Vietnam at 46%, Sri Lanka at 44%, and China at 34%. Watch Anthony Galliano speaking about this on B2B Cambodia HERE.
