The United States and Cambodia agreed on Friday to a trade deal that sets a 19 percent tariff on Cambodian goods, easing the concerns of a developing country that had been spooked for months by one of the steepest tariffs initially announced by the Trump administration.
Cambodia is a key manufacturer in the global garment and footwear industry, making apparel and sneakers for brands such as the Gap, Levi’s and Nike. While much of the focus on the U.S. trade talks in Southeast Asia has been on bigger economies such as Vietnam and Indonesia, Cambodia was arguably facing the biggest hit from U.S. tariffs, more so than any other country in the region.
When President Trump announced his “liberation day” tariffs on April 2, Cambodia was hit with a 49 percent tariff, the highest of any nation in Southeast Asia. This was a big blow to a poor country that was heavily exposed to the United States, Cambodia’s single largest export market. In 2024, U.S. exports made up around 37 percent of its total exports, and a whopping 25 percent of its gross domestic product.
The initial 49 percent tariff stunned the country’s garment manufacturers and its million garment workers, who feared job losses and worsening labor conditions.
In an interview, the country’s deputy prime minister, Sun Chanthol, said a 19 percent tariff meant that the United States had slashed the rate by 61 percent, which he says is the largest reduction in terms of percentage given to any country.
“I’m going to express our appreciation to President Trump and to the U.S.,” said Mr. Sun Chanthol, who has led multiple rounds of negotiations with the United States.
The announcement on Friday came nearly a week after Mr. Trump had threatened to end talks with both Cambodia and Thailand if they did not agree to a cease-fire to stop one of the deadliest border clashes between the two nations in decades. Some in Cambodia are expressing gratitude toward Mr. Trump, believing that if he had not intervened the clashes would have continued.
The adjusted tariff was comparable to other countries in the region: Thailand also received a 19 percent tariff on Friday; Indonesia, 19 percent; and Vietnam, 20 percent. Because of that parity, Cambodia will have the ability to attract more foreign direct investment, maintain its existing investor base and encourage companies to expand their factories and create more jobs, Mr. Sun Chanthol added.
As part of the concessions, Mr. Sun Chanthol said that Cambodia has agreed to slash tariffs on American imports from a maximum of 35 percent to zero, and for its national flight carrier, Air Cambodia, to buy 10 Boeing 737 Max 8 planes, with the option to buy 10 more.
“That is important, because we have never acquired any Boeing aircraft, but this is the first time that we are doing so,” he said. “Cambodia’s purchasing power is not as big as other countries, but we are showing our commitment.”
He said Cambodia will also crack down on the illegal transshipment of Chinese goods into Cambodia. He was referring to the practice of Chinese manufacturers evading higher U.S. tariffs by shipping goods into countries like Cambodia and then sticking a “Made in Cambodia” label on them before they are sent to the United States.
“We will not play that game, we are committed to the U.S., and we will fight that very hard,” Mr. Sun Chanthol said.
Cambodia, like Vietnam, was a big beneficiary of Mr. Trump’s first trade war. After the United States imposed punishing tariffs on China in 2018, many manufacturers flocked to Cambodia, drawn by its low labor costs, proximity to China, and attractive incentives for foreign investors. During Mr. Trump’s first term, Cambodia’s exports to the United States more than doubled, to over $5.3 billion.
The United States has also asked Cambodia to help combat online scam operations that target American citizens, Mr. Sun Chanthol said.
In June, Amnesty International accused the Cambodian government of deliberately ignoring a litany of human rights abuses including slavery, human trafficking, child labor and torture being carried out by criminal gangs on a vast scale in more than 50 scam compounds located across the country. Cambodia has called the report exaggerated.
Mr. Sun Chanthol said that Cambodia recognizes the problem and has set up a high-level task force, headed by Prime Minister Hun Manet, to fight the operations. But experts have called previous crackdowns performative because several tycoons and officials tied to the ruling elite are linked to these operations, which are estimated to be a $19 billion to $29 billion industry.
Sui-Lee Wee is the Southeast Asia bureau chief for The Times, overseeing coverage of 11 countries in the region.
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