Trump’s China tariff war a boon for Cambodia
Trump’s China tariff war a boon for Cambodia
Cambodia could be a major winner if the US President-elect Donald Trump goes through with his threat to drastically hike tariffs on Chinese goods.
US companies are already planning to shift production to the Kingdom from China as they look for alternative sources of goods.
Trump, who won a resounding victory in last week’s presidential election, has threatened tariffs of 60 percent or more on Chinese products.
Steve Madden, a $3 billion US shoe company known for its trendy footwear for teens, announced immediately after Trump’s win it would halve production in China and turn to Cambodia and other low-cost countries such as Vietnam.
“We have been planning for a potential scenario in which we would have to move goods out of China quickly,” Steve Madden CEO Edward Rosenfeld told Wall Street analysts in an earnings call after last week’s election.
“And we are putting that plan in motion.”
Cambodia Chamber of Commerce Vice-President Lim Heng said Trump’s plan is a tremendous boost for companies in the Kingdom.
“We know all about the (trade) war threat between China and America,” he told Khmer Times yesterday.
“This threat will push Chinese companies to invest more in Cambodia and export to the US.
“And not just the US, but to places like the EU as well. Chinese companies and regional companies will come here and invest in Cambodia and export to the US, Europe and other places.
“It is a very big benefit for Cambodia and Cambodian companies,” added Heng, CEO of the Lim Heng Group, a major construction company.
He said the clothing, footwear and travel goods sector would be a key beneficiary, along with raw materials, solar and electric companies.
The US is already Cambodia’s largest export market, accounting for 40 percent of all exports last year – worth a total $8.9 billion.
Trump is also planning across-the-board tariffs of 10-20 percent on all other countries except Mexico which will be hit with 25 percent and faces the threat of a punitive 100 percent if it fails to act on illegal immigration.
His planned increases are on top of existing tariffs.
Economists warn if Trump carries out his threat, it would cause massive harm to the entire US economy – the world’s largest – and hit consumers there hard.
The US National Retail Federation published a study last week that warned Trump’s proposed tariffs on apparel, toys, furniture, appliances, footwear and travel goods alone would cost consumers an extra $46 billion to $78 billion a year.
“Even after changes in sourcing, the proposed tariffs would have a substantially negative impact on American consumers purchasing the targeted products,” the NRF study said.
“We find that the additional costs associated with these proposed tariffs would be too large for US retailers to absorb and, when passed on to consumers, would result in prices higher than many consumers would be willing or able to pay.”
Analysts say raising tariffs would do nothing help US producers – the central point of the plan.
“We can’t just start making Barbie dolls and Tonka trucks and Care Bears in the US,” said Jay Foreman, CEO of toy designer Basic Fun.
“Not overnight, not in the next 12 months, and frankly speaking, never.”
