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Yahoo
10-07-2025
- Business
- Yahoo
Southeast Asia Reels as Trump's Tariffs Escalate Tensions
Southeast Asian governments have been jolted into crisis mode once again. As U.S. President Donald Trump sent out a fresh round of tariff letters on Monday, trade anxieties have been reignited across the region. Political leaders and economists have responded with a mix of shock and determination—shock at how high the proposed tariffs remain, and determination to use the few weeks left before Trump's new deadline of Aug. 1 to secure better terms. More from Sourcing Journal Thailand-Cambodia Border Closures Snarl Regional Trade, Apparel Manufacturing President Xi Aims to Cement 'Iron Clad Friendships' in Asia Amid US Tariff Drama Southeast Asian Countries See Markets Tumble; Move From Shock to Action The July 2 agreement with Vietnam had injected cautious optimism into the region. That deal lowered tariffs on Vietnamese exports to 20 percent—down from a previously announced 46 percent—while setting a 40 percent tariff on transshipped goods. In exchange, the U.S. will gain zero-tariff access to Vietnamese markets. Vietnam remains the region's largest apparel exporter to the U.S., sending roughly $18.6 billion worth of goods in 2024, according to the U.S. Census Bureau. Cambodia follows with $7.8 billion, then Indonesia at $6.4 billion, Thailand at $2.7 billion, and Malaysia at $1.6 billion. At a press conference in Phnom Penh on Tuesday, Cambodian Deputy Prime Minister Sun Chanthol acknowledged that negotiations with the U.S. would continue. He highlighted one silver lining: the tariff had dropped from the 49 percent announced in April to 36 percent in Trump's latest letter. However, he pointed out that in some cases, such as Malaysia, tariffs had actually increased—from 24 percent to 25 percent. The local business community in Phnom Penh responded with growing unease. 'Disappointed,' Ken Loo, Secretary General of the Textile, Apparel, Footwear and Travel Goods Association of Cambodia (TAFTAC), told Sourcing Journal summing up his reaction to the 36 percent tariff. But he quickly added, 'There are still three weeks. The government will continue to negotiate with the U.S. and try to strike a deal.' President Trump's letters emphasized the need for reciprocal trade, echoing themes from his earlier administration. 'Our relationship has been, unfortunately, far from reciprocal,' Trump wrote in his letter to Cambodian Prime Minister Hun Manet dated July 7. 'Starting on August 1, 2025, we will charge Cambodia a tariff of only 36% on any and all Cambodian products sent into the United States, separate from all sectoral tariffs. Goods transshipped to evade a higher tariff will be subject to the higher tariff.' Trump further stated that if Cambodia or its companies chose to build or manufacture products within the U.S., they would face no tariff at all. 'We will do everything possible to get approvals quickly, professionally, and routinely—in other words, in a matter of weeks.' He also warned that if Cambodia increased its own tariffs on U.S. goods, the U.S. would respond by adding an equal percentage to the existing 36 percent. 'These tariffs are necessary to correct the many years of Cambodia's tariff and non-tariff policies and trade barriers,' he wrote, calling the trade deficit with Cambodia a threat to U.S. national security. The letter concluded: 'You will never be disappointed with the United States of America.' Cambodia, where the U.S. accounts for 39 percent of garment, footwear, and travel goods exports, is heavily reliant on preferential market access from both the U.S. and the European Union. A withdrawal of those benefits, analysts warn, could shake the very foundation of its export-driven economy. Trade expert Massimiliano Tropeano pointed out that Cambodia's exclusion from any mention of transshipment provisions—as Vietnam was—is both confusing and potentially concerning. 'Although it is not yet clear what will be considered 'transshipping' and what will not, Cambodia strangely enough did not have a similar clause,' he said. 'The 36 percent is quite high—almost at the same level as Vietnam's transshipment duty of 40 percent.' He added that it remains uncertain whether garments made with Chinese raw materials would be classified as transshipments. 'Vietnamese factories will now have to demonstrate a 'substantial transformation.' This could increase orders to local mills using locally sourced fabrics, and perhaps a shift toward dyeing and finishing facilities in Cambodia too.' The past two months of tariff confusion have already battered Cambodia's garment sector. In 2024, Cambodia's garment industry posted $13.6 billion in exports, supporting approximately 918,000 formal jobs. Manufacturers told Sourcing Journal that the uncertainty has disrupted planning, added costs, and forced brands to reconsider sourcing strategies—including possibly redirecting orders to competing countries. A recent survey conducted by Better Factories Cambodia (BFC), the International Labour Organization (ILO), and the International Finance Corporation (IFC) underscored these anxieties. Nearly half of Cambodia's garment, footwear, and travel goods factories reported that they were uncertain they could maintain operations beyond the next three months due to tariff uncertainty and declining buyer confidence. More than a quarter of factories said buyers were pushing for price reductions; 15 percent reported having few or no orders on hand. The survey, which was conducted across 756 registered factories, revealed: 44 percent of factories could operate at current capacity for three more months at most 27 percent said buyers had requested lower prices for 2025 orders 15 percent reported minimal or no orders 65 percent still expressed cautious optimism Factories exporting to the U.S. made up the bulk of respondents. Of those, 51 perent of their output was U.S.-bound. Factories exporting to the EU accounted for 31 percent of production. Other major markets included Japan, Canada, China, Australia, and the UK. How long can factories sustain their business? Forty percent said they could sustain operations for one to three months; 8 percent said less than one month. With the sector already characterized by rapid turnaround times and flexible production schedules, even a slight decline in orders could trigger widespread layoffs and suspensions—reminiscent of the COVID-19 trade collapse, the survey found. The survey also noted other issues, including labor shortages, which were compounding the problem, with rising competition from new provincial factories and worker relocation issues that have contributed to a high attrition rate and diminished efficiency. Other countries in the region have been reacting with a similar sense of shock. Japan and South Korea face blanket 25 percent duties, while Myanmar and Laos were hit with 40 percent, and Indonesia with 32 percent. Indonesia's government has moved quickly. Coordinating Minister for Economic Affairs Airlangga Hartarto is set to resume negotiations with U.S. trade envoys to reduce the 32 percent tariff. 'There is a narrow window for diplomacy, and everyone is recalculating their leverage,' said one Jakarta-based trade official. Meanwhile, the tariff blow hit Thailand hard. The 36 percent figure was unchanged from April levels—despite Thailand submitting a new proposal to Washington on Sunday, pledging to cut its $46 billion trade surplus by 70 percent within five years. Commerce Minister Jatuporn Buruspat said that an additional review and other countermeasures would be considered, while preparing for renewed talks with the U.S. The situation in Thailand has been complicated further by a changing political landscape: Prime minister Paetongtarn Shinawatra has been suspended by court order over alleged ethical misconduct related to a border dispute with Cambodia. Malaysia's Ministry of Investment, Trade and Industry (MITI) said Tuesday it remained committed to ongoing engagement with the U.S. toward a 'balanced, mutually beneficial, and comprehensive' trade agreement. Malaysia saw its proposed tariff increase slightly—from 24 to 25 percent. Analysts say this is a make-or-break moment for Southeast Asian trade diplomacy. Each country must now perform a delicate balancing act: securing national interests without undermining regional solidarity or provoking harsher terms. As each nation scrambles to adjust their numbers—and perhaps offer concessions or deeper market access—the urgency is palpable.
The Star
08-07-2025
- Business
- The Star
Cambodia urges U.S. to further lower tariffs
PHNOM PENH, July 8 (Xinhua) -- Cambodia on Tuesday called on the United States to further lower tariffs it has imposed on Cambodian products exported to the U.S. market. The United States on Monday revised tariffs on Cambodian exports to 36 percent, taking effect on Aug. 1. The new tariff marked a reduction from the 49 percent it imposed on April 2. Cambodian Deputy Prime Minister Sun Chanthol, who serves as chief negotiator for tariffs with the United States, said the kingdom will continue to negotiate with the United States, hoping that the latter will further lower the tariffs. "We will try to negotiate as much as possible to get the lowest tariff rate for the interests of our nation," he said at a press conference here. "We are still on the (United Nations) list of Least Developed Countries (LDCs), so the U.S. should understand this and give us an opportunity to progress forward to the graduation from the LDC status in 2029," he added. Meanwhile, Chanthol urged manufacturers in the kingdom to stay calm, saying that the government is capable enough of protecting the interests of the nation, employers and employees. Kin Phea, director-general of the International Relations Institute of Cambodia, an arm of the Royal Academy of Cambodia, said U.S. tariffs on goods imported from Cambodia and dozens of other countries highlighted selfishness, protectionism, unilateralism of the United States. "U.S. tariffs are a lose-lose game that can escalate trade tensions and provoke retaliatory measures from other countries, ultimately damage international trade relations," he told Xinhua. "These tariffs raise the cost of imported goods for consumers and businesses, leading to higher prices and reduced purchasing power," he added.
The Star
07-07-2025
- Business
- The Star
Work on bridge across Mekong River in Cambodia's Kratie province nears completion
The bridge will be open temporarily for motorcycles and family cars during the Pchum Ben Festival, or Ancestor's Day, in late September. - Instagram PHNOM PENH: Work on a China-funded bridge across the Mekong River in northeast Cambodia's Kratie province neared completion after two and a half years of construction, said a press release from Cambodia's Ministry of Public Works and Transport on Monday (July 7). A ceremony for connecting the final segments of the bridge was held on Monday, the press release said. The 1,761-metre-by-13.5-metre bridge, along with a 31.69-km connecting road, is being constructed by the Shanghai Construction Group under China's preferential loan. "By the end of June 2025, 96 per cent of the bridge construction has been completed," Cambodian Deputy Prime Minister Sun Chanthol said. According to Chanthol, the bridge will be open temporarily for motorcycles and family cars during the Pchum Ben Festival, or Ancestor's Day, in late September. The bridge is another fruit of close cooperation between Cambodia and China under the Belt and Road Initiative. "This project will importantly contribute to connecting Cambodia's interior transportation system, promoting the growth of transportation in the areas of agriculture, agro-industry and tourism in the northeastern provinces," Chanthol said. The project would contribute to promoting Asean connectivity and the Lancang-Mekong subregion connectivity, the official said. - Xinhua
The Diplomat
04-07-2025
- Business
- The Diplomat
Cambodia, US Nearing Agreement on Trade, Phnom Penh Says
Among the ASEAN nations, Cambodia is the most potentially exposed to any sudden shift in U.S. trade policy. Cambodia and the United States have agreed to a framework for a trade agreement, the Cambodian government announced today, just days ahead of the Trump administration's July 9 tariff deadline. The announcement came after a virtual meeting between Deputy Prime Minister Sun Chanthol and Sarah Ellerman, the assistant U.S. trade representative for Southeast Asia and the Pacific. 'In this meeting, both sides reviewed and agreed on the draft Joint Statement on Framework for United States-Cambodia Agreement on Reciprocal Trade, which will be released to the public soon,' the government said in a statement. It added that Prime Minister Hun Manet's government 'will continue to cooperate closely with the United States of America to achieve a mutually beneficial trade and investment relationship.' During President Donald Trump's 'liberation day' tariff announcement on April 2, Cambodia was hit with a 49 percent tariff – the highest of any nation in Southeast Asia. Since then, the Council for the Development of Cambodia (CDC) and the Ministry of Commerce have held three rounds of negotiations with U.S. trade officials, the latest of which took place on June 25. However, unlike the cases of Vietnam and Indonesia, the reporting on the trade talks between Phnom Penh and Washington has been vague as to what has been discussed during the negotiations or what the impending framework agreement will involve. Chanthol said recently that Cambodia had submitted a comprehensive set of documents to the U.S. trade authorities. As the Khmer Times reported, 'these include proposed tariff rates, export compliance conditions, and a framework for how U.S. goods would be taxed upon entering the Kingdom.' While Cambodia's trade negotiations with the U.S. have not received as much attention as its neighbors Vietnam, Indonesia, and Thailand, the potential political impacts of the tariff are perhaps greater here than anywhere else in Southeast Asia. Of all the nations that rely on the U.S. market, Cambodia is the most exposed to any potential change in U.S. trading conditions. The country exported $9.91 billion worth of goods to the U.S., according to Cambodian government figures. This made up around 37 percent of its total exports, and a whopping 24.8 percent of its gross domestic product for 2024. (The U.S. Trade Representative's Office puts the figure for Cambodian exports higher, at $12.7 billion, as compared to $321.6 million in U.S. exports to Cambodia.) This trend has continued in 2025, with Cambodian exports totaling $4.35 billion from January to May – a 27 percent increase compared to the same period in 2024. For 2024, total exports stood close to $10 billion. As such, the imposition of a significant U.S. tariff on Cambodian imports could have a major effect on the country's manufacturing industry, particularly its garment and footwear sectors. During a workers' forum on June 7, Cambodian garment workers expressed their concerns that the 49 percent tariff increase would lead to job losses, worsening working conditions. Long Sophat, a 38-year-old factory worker in the Teuk Thla area of Phnom Penh, told the forum that a cut in garment orders would likely affect the lowest-skilled workers, Camboja News reported. 'I am afraid my boss will invest in other countries, and working conditions will worsen or result in the loss of job and income. I am responsible for my family, and I have bank debts,' she said. According to Camboja News, as of last year, the country had 1,555 factories and enterprises, employing nearly 1 million workers, many of them women from rural Cambodia. Mass layoffs in the Cambodian apparel and garment manufacturing sector, should they eventuate, could well result in widespread hardship and potentially political unrest. Working against Cambodia is the fact that the country has never commanded much attention in Washington – but when it does so, it is often for the wrong reasons. Since the first Trump administration, U.S. officials have become concerned about the country's economic and strategic proximity to China, a concern that has come to center around the Ream Naval Base, the subject of extensive Chinese refurbishment over the past few years. More recently, questions have been raised about the industrial-scale online scamming operations that have planted themselves firmly on Cambodian soil since the end of the COVID-19 pandemic. In a report last week, the rights group Amnesty International accused the Cambodian government of being 'complicit' in the scamming operations run mostly by Chinese crime syndicates, which have defrauded billions from victims around the world – including the United States. (The Cambodian government has denied this and similar allegations.) As Trump told Fox News earlier this week, 'We'll look at how a country treats us – are they good, are they not so good – some countries we don't care [about]. We'll just send a high number out,' he said. All of this compares unfavorably with Vietnam, a nation that was hit with a similarly harsh 46 percent tariff on April 2, but which has grown into an increasingly important strategic partner of the U.S. over the past two decades. Given that Vietnam's recently announced trade agreement will still see the country hit with a 20 percent tariff, it is hard to see how Cambodia can get a much better deal, at least without making substantial concessions on non-trade issues of concern to Washington.
Fibre2Fashion
28-05-2025
- Business
- Fibre2Fashion
Cambodia cuts GDP growth projection to 5.2% for 2025, 5% for 2026
Cambodia has cut its gross domestic product (GDP) growth projection to around 5.2 per cent for this year and to 5 per cent for the next from over 6 per cent earlier due to the anticipated impact of US trade tariffs. Before the tariffs were announced, the growth projection stood at around 6.3 per cent for both 2025 and 2026 and around 6.5 per cent for the medium term (2027-2028). 'The decrease is due to the expected impact of reciprocal tariffs policy on export-serving sectors,' according to a recent report on the 'Budget Strategy Plan 2026-2028 and the Preparation of the Finance Management Bill for 2026'. Cambodia has cut its GDP growth projection to around 5.2 per cent for this year and to 5 per cent for the next from over 6 per cent earlier due to the anticipated impact of US trade tariffs. If the external situations worsen and the talks with the US do not yield expected results, the growth will further decline, a government report noted. The first round of talks with the US recently got over. If the external situations worsen and the talks with the United States do not yield expected results, the growth will further decline, the report noted. The ad hoc Cambodia-US bilateral relations coordination working group led by Deputy Prime Minister Sun Chanthol recently wrapped the first round of talks with the United States, a domestic media outlet reported. Fibre2Fashion News Desk (DS)
