BGA Cambodia Managing Director Bora Chhay wrote an update to clients on the impact of U.S. President Donald Trump’s reciprocal tariffs on the Cambodian economy.

Context

  • U.S. President Donald Trump on April 2 imposed sweeping tariffs on foreign-made imports from most of the world’s countries. Cambodia, among others, faces severe economic consequences, including tariffs as high as 49 percent. Much of the reason Trump imposed this high tariff was due to Cambodia’s large trade surplus with the United States.
  • Prime Minister Hun Manet has ordered Minister of Economy and Finance Aun Pornmoniroth to convene a meeting between relevant government ministries and the private sector. The objective of this meeting will be to study the tariff impacts and propose recommendations, including intervention measures aiming to boost trade between Cambodia and other countries, including the United States.

Significance

  • Cambodia’s export-driven economy could face significant setbacks, with total exports accounting for 40 percent of the country’s GDP, of which shipments to the United States account for 27 percent. Given Cambodia’s heavy reliance on the U.S. market, Trump’s newly imposed tariffs threaten key industries.
  • While Cambodia initially projected 6.3 percent GDP growth for the year, escalating regional trade risks and tariff pressures could push growth below government and International Monetary Fund projections. Cambodia is not expected to retaliate against the U.S. tariffs; instead, its leaders will likely take a diplomatic approach, seeking negotiations to secure the best possible outcome while reinforcing bilateral ties with the United States.

Implications

  • To navigate these challenges, companies should proactively prepare for short-term market fluctuations in Cambodia, which could take place in the fourth quarter of 2025 and early 2026, while exploring long-term opportunities in Cambodia’s domestic market and beyond the U.S. market. Given the unpredictability of further actions from the Trump administration, maintaining the status quo or operating at minimum levels while adhering to existing contract terms may be the most prudent approach.
  • Cambodia has the potential to attract investment, but its position remains uncertain due to the severe impact of Trump’s tariffs, which are as high as 49 percent. Nevertheless, Cambodia maintains key advantages, including a favorable investment climate with attractive incentives, an increasing skilled yet cost-competitive workforce, expanding infrastructure and a growing logistics network.

We will continue to keep you updated on important trade and economic developments in Cambodia as they occur. If you have any questions or comments, please contact BGA Cambodia Managing Director Bora Chhay at bchhay@bowergroupasia.com.

Best regards,

BGA Cambodia Team

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Managing Director

Bora leads BGA’s practice in Cambodia. He is a highly regarded government affairs and public policy expert who helps clients resolve business issues, navigate regulatory and legal challenges, expand operations, explore new investment opportunities and enter Cambodia’s market.  Prior to joining BGA, Bora served for five years as a fast-moving consumer goods (FMCG) corporate and regulatory affairs professional. In this role, he helped transform his company’s government relations and corporate affairs unit into a more effective business-driven group. Notwithstanding Cambodia’s difficult and highly regulated macro environment, Bora played a key role in developing and executing government relations and corporate affairs ... Read More