U.S. President Donald Trump on Wednesday announced sweeping reciprocal tariffs, hitting Cambodia with a 49% rate set to take effect April 9. The news broke on Thursday morning in Phnom Penh, sending officials and industry leaders scrambling to make sense of the tariffs.

The administration labeled Cambodia one of about 60 “worst offenders” for undermining U.S. economic goals. Its customsized tariff rate falls between Vietnam’s 46% and China’s 54%, which were announced on the same day. China holds the largest trade surplus with the U.S., while Vietnam ranks third.

Presently, U.S. goods imported to Cambodia face an average customs duty rate of 97%, the Trump administration claimed.

Cambodian Ministry of Commerce spokesperson Sok Sopheak said he was aware of the new tariff but was waiting for confirmation from officials in Washington.

“We can’t comment yet,” he said, before offering a brief reaction.

“First, we need to analyze each product to determine whether it is affected because the tariffs don’t apply to all goods – there’s a list of exemptions,” Sopheak said.

A banking and financial services expert told CamboJA News the tariff appears to apply to all goods and will be added to the existing 10% universal tariff.

Ministry of Labor and Vocational Training spokesperson Katta Orn declined to comment, stating that the ministry is still monitoring the situation.​

As a least developed country, Cambodia enjoys special trade benefits to major markets, including duty-free, quota-free access under the EU’s Everything But Arms (EBA) program. But in recent years, those privileges have been threatened due to concerns over human rights abuses. Cambodia also once had duty-free access to the U.S. market for certain goods under the Generalized System of Preferences program, which expired in 2021.

China and the U.S. are Cambodia’s largest export markets, with the U.S. far outpacing China.

From January to February, Cambodia’s exports to the U.S. soared to over $1.6 billion, a 25% jump from the same period last year, according to Cambodian customs data.

In 2024, total trade between Cambodia and the U.S. hit $10.18 billion, a 11.2% increase from 2023. Exports to the U.S. rose 11.4% to $9.92 billion, while U.S. imports totaled $264.15 million, up 2.7%.

Hong Vannak, an economics researcher at the Royal Academy of Cambodia, said the new tariffs are a serious concern for Cambodia, as the U.S. is the country’s largest market, especially for garments – its economic backbone. The impact could be far-reaching, he warned.

“If we ease tariffs on some U.S. goods, perhaps the U.S. will reconsider,” he said, adding that lower demand for Cambodian products will lead to factory cutbacks, lower wages, and job losses.

Meanwhile, some industry leaders are left scrambling, uncertain of the next steps.

Kaing Monika, Deputy Secretary General of the Textile, Apparel, Footwear & Travel Goods Association of Cambodia, told CamboJA News the sector is still assessing the tariff details and warned against panic.

Stephen Higgins, managing partner at Mekong Strategic Capital, a leading investment and advisory firm in Phnom Penh, said the US administration methods for calculating the new tariff was “unsophisticated”, relying on simple arithmetic.

“All they have done is take a country’s trade surplus with the U.S., and divide it by that country’s exports to the U.S., which they then divide by two,” he said. “If it wasn’t such a serious issue, it would be laughable.”

Higgins also noted the challenge Cambodia will face in lobbying Washington for relief, as it competes with numerous other countries making similar appeals. 

He said Cambodia’s best chance would be to rally ASEAN for a collective response, but even then, the arbitrary nature of the tariff calculation leaves little room for negotiation.

In the short term, Cambodia’s garment exports could stall as U.S. importers hold off, hoping for a policy reversal. Many may opt to deplete existing inventories rather than pay steep tariff hikes, a move that could deal a major blow to Cambodia’s economy in the coming months, Higgins said.

“Longer term, the position is more uncertain, given other major garment exporters to the U.S. are also hit with big tariffs.”

Government spokesperson Pen Bona declined to comment. 

The U.S. Embassy in Cambodia did not immediately respond to a request for clarification on the provisions of the tariff rate or its impact on the Cambodian economy.

(Reporting by Coby Hobbs, Seoung Nimol, Khuon Narim, Sovann Sreypich)