Cambodia recently breathed a sigh of relief as the United States agreed to lower the tariff rate on Cambodian exports from 49% to 19%. This move has been crucial in preventing the collapse of Cambodia’s vital garment and footwear sector. Sun Chanthol, Cambodia’s Deputy Prime Minister and top trade negotiator, expressed his gratitude towards US President Donald Trump for this significant intervention.
Chanthol emphasised the importance of this tariff reduction in maintaining the competitiveness of Cambodia’s garment industry vis-a-vis other countries like Indonesia and Vietnam. He stated,
“If the US maintained 49% or 36%, that industry would collapse in my opinion.”
The garment and footwear manufacturing sector is a cornerstone of Cambodia’s economy, employing nearly a million workers, predominantly women, who support multiple family members.
The impact of a high tariff rate would not only have jeopardised the livelihoods of these workers but also had severe repercussions on Cambodia’s overall economic stability. With close to $10 billion worth of exports shipped to the US market in 2024 alone, primarily comprising textiles and shoes manufactured for global brands like Adidas and H&M, any disruption could have been catastrophic for the country.
Acknowledging the significance of this trade relationship with Washington, Chanthol highlighted that while a framework had been agreed upon, final details of the deal are still pending. As part of this agreement, Cambodia has committed to purchasing Boeing 737 Max 8 aircraft for its national carrier, Air Cambodia, a strategic move aimed at fostering mutual benefits through trade cooperation.
Despite facing challenges due to limited purchasing power compared to larger economies, Cambodia approached negotiations with transparency and goodwill. Chanthol remarked,
“Our approach was we put everything on the table, negotiate in good faith, ensure both countries will benefit from this trade deal.”
The positive outcome reflects not just an economic win for Cambodia but also underscores the value of diplomatic relations in resolving conflicts peacefully. In expressing his gratitude towards President Trump for his role in facilitating both tariff negotiations and peace efforts within Southeast Asia, specifically concerning a ceasefire between Thailand and Cambodia, Chanthol acknowledged how such interventions have far-reaching implications beyond trade agreements.
As Cambodia continues to navigate its economic landscape amidst global uncertainties, developments like these underscore the interconnectedness of international markets and underline the significance of collaborative efforts in sustaining economic growth and stability.
In conclusion, while tariffs may seem like distant policy decisions to many, their impact can be deeply felt by individuals struggling to make ends meet. The story behind these negotiations sheds light on how intricate threads connect nations economically, and how pivotal interventions can safeguard industries and livelihoods alike.