Cambodia is open to negotiation with US over tariff hike, offers to slash import duties

Cambodia is open to negotiation with US over tariff hike, offers to slash import duties

Two days after US President Donald Trump announced tariffs, Prime Minister Hun Manet Friday announced a significant reduction in import tariffs on US products as part of an effort to strengthen trade relations amid new tariff challenges.

The move comes in response to the United States’ decision to impose a 49 percent tariff on Cambodian exports, set to take effect on April 9, 2025.

In a formal letter titled ‘Request for Negotiation on the Tariff Implementation on Cambodian Exports’, Mr Hun Manet urged the US government to delay the tariff implementation and engage in immediate negotiations.

“In response to your recent announcement on April 2, 2025, imposing a 49 percent tariff on Cambodian products from April 9, 2025, Cambodia proposes to negotiate with Your Honorable’s administration at the earliest convenient time and wishes to request that your esteemed government consider postponing the above-mentioned tariff implementation,” the letter stated.

To demonstrate goodwill and commitment to strengthening bilateral trade ties, Mr Hun Manet announced that Cambodia would immediately reduce tariffs on 19 US product categories, lowering them from the maximum bound rate of 35 percent to an applied rate of 5 percent.

The Prime Minister also directed Minister of Commerce (MoC) Cham Nimul to engage with the Office of the US Trade Representative (USTR) for further discussions on the matter.

Following the directive, Nimul formally reached out to US Trade Representative Ambassador Jamieson Greer, emphasizing Cambodia’s dedication to constructive dialogue and economic cooperation.

“On behalf of the MoC of the Royal Government of Cambodia, I would like to extend our sincere appreciation to the US government for the continued support and excellent cooperation in all sectors for the past 75 years of our diplomatic relations. Cambodia deeply values its longstanding relationship with the US, which has been built on mutual respect, shared interests, and constructive engagement over many decades,” Nimul stated in the letter.

She reiterated Cambodia’s commitment to lowering tariffs on US imports and urged Washington to establish a negotiation mechanism.

Additionally, she requested that the US government extend the deadline for the new tariffs to allow for consultations with stakeholders and an assessment of alternative approaches that align with both US economic priorities and Cambodia’s sustainable development goals.

“Cambodia remains fully committed to engaging in constructive and productive dialogue with the US government to achieve mutually beneficial outcomes,” Nimul added.

The move underscores Cambodia’s proactive stance in mitigating potential economic fallout from the US tariff decision while reinforcing its commitment to fostering stronger trade relations with the world’s largest economy.

The US has yet to respond to Cambodia’s request for negotiations.

The proposed tariff reduction covers 19 products, including fresh, chilled, and frozen beef and pork, poultry offal (chicken and turkey), dairy derivatives like whey, nuts such as almonds, maize (corn), soya beans, sugar syrups, frozen potatoes, prepared nuts and seeds, whiskey, heavy-duty motor vehicles exceeding 5 tonnes, and motorcycles with engine capacities over 800cc. The tariff for most of these items will be reduced from 15 percent or 7 percent to 5 percent.

Speaking to Khmer Times about the latest trade development, Vichet Lor, Vice-President of the Cambodia Chinese Commerce Association (CCCA), praised the government’s strategic approach to negotiations.

“The government’s flexible and conciliatory approach in negotiating a reduction of import tariffs on US goods to Cambodia – from 35 percent to 5 percent – is a positive sign for bilateral relations,” he said.

He underscored the significance of the US market for Cambodia’s economy, emphasizing that diplomatic negotiations are the most effective way forward.

“The US market is a key destination for Cambodian products, making negotiation the only viable mechanism. If the negotiation results allow us to benefit, we have no alternative but to pursue them,” he explained.

Lor also highlighted the necessity of maintaining strong relationships with existing trade partners while expanding into new markets. “We must maintain existing markets while expanding into new ones. Currently, the US and European markets are Cambodia’s primary trading partners, and we cannot afford to overlook them, as they play a crucial role in job creation, particularly in the garment, footwear, and travel goods sectors,” he added.

Regarding the government’s proposed tariff reduction with the US, Arnaud Darc, CEO of Thalias Group, explained on his social media on Saturday that Cambodia is making a strategic move by proposing a tariff reduction on 19 categories of US goods, including a major cut in import duties for certain US vehicles from 35 percent to 5 percent.

For example, a Ford Ranger Raptor with a CIF value of $40,000 would see its total landed cost drop from $78,221 to $61,002 – saving $17,219 per vehicle, or 22 percent at the port.

In response to the question about what Cambodia’s response means, he explained, this means that by lowering import duties, importers will be able to offer US vehicles, such as Ford and GM, at lower prices, making them more affordable and accessible to consumers. As a result, consumers will get better value for their money.

Additionally, this move demonstrates Cambodia’s commitment to fair and balanced trade, which strengthens trust and improves market access for international businesses.

Overall, it highlights how well-crafted policies can create tangible benefits for both consumers and businesses, contributing to Cambodia’s growing economic engagement with the world.

“This isn’t just about a vehicle. It’s about building trust, improving market access, and showing how policy can deliver real, measurable impact,” he added.

Earlier speaking to Khmer Times, Dr. Jayant Menon, a Visiting Senior Fellow at the Institute of Southeast Asian Studies (ISEAS-Yusof Ishak Institute) in Singapore and former Lead Economist in the Office of the Chief Economist at the Asian Development Bank, emphasized the significance of recent developments for Cambodia, which has been subjected to the highest tariff of 49 percent.

“Efforts are needed to ensure that export markets are diversified so that there is less heavy reliance on the US market alone.

The EU and other regional markets can definitely absorb exports from a small country like Cambodia. But it will take time,” he stated.

The Textile, Apparel, Footwear and Travel Goods Association in Cambodia (TAFTAC) also issued an announcement on Thursday regarding the US import tariff increase, expressing concerns over its potential impact on Cambodia’s export sector.

“The US President decided to increase the US tariff on products imported into the U.S. from all countries, including Cambodia, and the implementation will be fully effective on April 9. This action causes concerns among TAFTAC members and our workers, as well as the general public, over the potential impact on the export of Cambodia’s garment, footwear, and travel goods sector,” the announcement stated.

TAFTAC urged all members, workers, and the general public to remain calm, noting that the announcement was made less than 24 hours ago and that its actual impacts are still being analyzed.

The association affirmed its commitment to working closely with the Royal Government and relevant stakeholders to find appropriate solutions as soon as possible.

Despite the tariff increase, Cambodia’s competitiveness remains relatively stable compared to regional competitors. China faces a total tariff increase of up to 79 percent, while Cambodia’s stands at 49 percent, Vietnam at 46 percent, and Myanmar at 45 percent.

TAFTAC expressed hope that the situation will improve after both governments engage in discussions and negotiations. The association emphasized its cooperation with the Royal Government and stakeholders to enhance Cambodia’s investment and business climate and boost competitiveness.

Additionally, TAFTAC reaffirmed its commitment to collaborating with the Royal Government to reduce the costs of doing business, particularly in areas such as logistics and electricity expenses.

The association remains optimistic that diplomatic discussions will yield positive outcomes and help mitigate the effects of the tariff increase on Cambodia’s key export industries.

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