Economy & Cambodia: the royal government proposes to negotiate ‘Trump Taxes’

The announcement by US President Donald Trump, which is part of a broader package of reciprocal tariffs targeting several of the United States' trading partners, is expected to come into effect on 9 April 2025. The Cambodian government responds.

Donald Trump

Economic impact

The Cambodian economy is heavily dependent on exports, with the United States being its biggest customer, accounting for 37.9% of the overall volume of exports. The majority of exports are clothing, travel goods and shoes. The imposition of such a high tariff could have a significant impact on these industries, leading to job losses and economic instability. However, some analysts remain optimistic about Cambodia's ability to negotiate, diversify its markets and mitigate the effects of tariffs.

Response from the royal government

The Cambodian government has expressed its intention to begin negotiations with the United States in order to reduce the impact of these taxes.

In a letter addressed to US President Donald Trump, Prime Minister Hun Manet asked the United States to consider postponing the implementation of these tariffs. He emphasised Cambodia's commitment to strengthening bilateral trade relations and proposed immediate reductions in customs duties on US imports. More specifically, Cambodia has lowered customs duties on 19 product categories, from a maximum of 35% to 5%, in order to promote imports of US products.

Hun Manet expressed Cambodia's willingness to engage in constructive dialogue with the United States in order to deepen trade relations and benefit both nations. The Cambodian government considers these negotiations essential to maintaining a positive trade relationship and mitigating the economic impact of tariffs.

Pan Sovicheat, spokesman for the Ministry of Trade, played down the immediate concerns, stating that the government was not alarmed and would endeavour to protect the interests of the export industry and workers. However, he acknowledged that the tariffs were ‘unreasonable’ and that negotiations were necessary to resolve the issue.

Public and private sectors

Private sector representatives, such as Ly Kunthai, president of the Cambodian Footwear Association, believe that the issue will be resolved through negotiations between Phnom Penh and Washington. Some analysts suggest that, although there may be short-term impacts, Cambodia can manage them by diversifying its export markets and negotiating better terms with the United States.

Casey Barnett, president of the American Chamber of Commerce in Cambodia, urged the Cambodian government to take bold steps to address the tariffs, warning of serious economic consequences if the issue was not addressed quickly.

Misconceptions and calculations

The US claim that Cambodia imposes an average tariff of 97% on US imports has been disputed. This figure is said to reflect trade balance ratios rather than actual tariffs, which average around 29.4%.

The calculation of the tariff of 49% as ‘half’ of Cambodia's alleged duties has been questioned, with some attributing it to a misunderstanding of the trade data.

Although the economic impact of the tariffs is a concern, the Cambodian government and the private sector remain hopeful that the negotiations will result in a resolution that minimises any damage to the country's economy.