As U.S. President Donald Trump ramps up the trade war with China, his administration announced Wednesday a 90-day reprieve on “reciprocal” tariffs for Cambodia and 90 other countries, while a 10% blanket tariff on all imports to the U.S. remains in place.
The delay gives some breathing room to negotiate a 49% tariff – the highest in the region – before it is levied on Cambodian exports to its largest market. But unions in Cambodia’s crucial garment sector fear future talks will not bring the rate down enough, and that the eventual impact could hit workers hard.
Ath Thorn, Vice President of the Coalition of Cambodian Apparel Workers Democratic Union (C.CAWDU), said both factory owners and workers have shared concerns since the tariff was first announced, and the recent pause has not alleviated uncertainty.
More than half of U.S. imports from Cambodia are garments, footwear, and travel goods – a sector that makes up 45% of Cambodia’s export revenue and employs over 900,000 workers. Last year, Cambodia shipped $9.9 billion in goods to the U.S., or nearly 38% of its total exports.
The two countries first established a textile trade agreement in 1999 to provide U.S. companies access to low-cost labor while improving labor protections in Cambodia.
Despite the 90-day pause, Thorn cautioned that the 49% tariff is still on track to be implemented. “If the government can resolve this in three months, it will be good. But if not, there could be serious consequences – factories may limit exports, shut down, or relocate to places like India, Egypt, or Indonesia,” he said.
Yang Sophorn, President of the independent Cambodian Alliance of Trade Unions (CATU), echoed Thorn’s concerns but remains hopeful a deal can be reached during the reprieve to limit or even avoid the impact on Cambodia’s key export sector.
Just two days after Trump announced the tariff, Prime Minister Hun Manet quickly slashed import duties on 19 U.S. goods from 35% to 5%. He posted a letter to his U.S. counterpart on Facebook and later confirmed his cabinet is awaiting the “green light” to send a delegation to Washington.
When asked about the U.S. administration’s view on Cambodia’s tariff cuts to negotiate a similar reduction, a U.S. Embassy spokesperson in Phnom Penh referred reporters to the White House.
Even with the tariff delay, the Trump administration has taken a critical view of Cambodian exports, claiming the country serves as a key transshipment hub for China to dodge U.S. tariffs.
Stephen Higgins, managing partner at Mekong Strategic Capital, a Phnom Penh-based investment firm, said the White House view stemmed from Cambodia’s past transshipment of Chinese solar panels to the U.S. “It was unhelpful to Cambodia,” he said.
He predicted the tariff pause could trigger a rush of U.S. orders ahead of the 90-day deadline, while the Cambodian government pushes for a fair deal.
Higgins also warned that China, which exports $18 billion in apparel to the U.S., may redirect its goods to other markets in response to the tariffs, potentially squeezing Cambodia.
As for relocation, Higgins said manufacturers are hesitant to make moves without knowing the U.S. stance after the 90-day reprieve. “How do you plan relocation when you don’t know what the U.S. will do?” he said. “Business likes certainty and predictability, and this current US administration doesn’t seem to understand the meaning of those words.”
Meanwhile, in a press release Thursday, the Ministry of Commerce referenced the tariff postponement and said the U.S. responded “positively” to Cambodia’s official request to negotiate.
When reached, Cambodian government spokesperson Pen Bona confirmed the 90-day pause on negotiations over the 49% tariff but declined to address the White House’s claims that Cambodia is a transshipment hub for Chinese goods or the impact on the garment sector.
Foreign Affairs Ministry spokesperson Chum Sounry did not respond to requests for comment.
