Cambodia set for negotiation over US tariffs, rejects 97% claim

Cambodia set for negotiation over US tariffs, rejects 97% claim

Prime Minister Hun Manet yesterday reaffirmed Cambodia’s readiness to engage in a constructive dialogue over the tariffs imposed by the United States and clarify misconceptions about the country’s trade policies.

Speaking at the inauguration of the $37 million Morodok Techo Flyover, Mr Hun Manet addressed the new tariffs affecting nearly 200 countries, including Cambodia. He emphasized that his government had been analyzing the economic impact for over two months and was prepared to take decisive action.

“The Cambodian delegation is ready to fly for negotiations if the US gives the green light,” he said.

The Premier also strongly refuted claims that Cambodia imposed a 97 percent tariff on US goods, clarifying that the figure refers to the trade imbalance between the two countries, not actual tariff rates.

“Since Cambodia joined the WTO in 2004, we have committed that tariffs on goods from any country, including the US, should not exceed 35 percent. In reality, Cambodian exports to the US are subject to an average tariff of 11 percent,” Mr Hun Manet explained.

He said that Cambodia maintains over 1,868 tariff lines for American goods, including 210 that are duty-free, and that the country’s highest tariff on US imports is 35 percent, with an average of 29.4 percent – far from the disputed 97 percent figure.

Mr Hun Manet outlined a two-step approach in response to the tariff issue. The first step involves reducing 19 tariffs on approximately 85 US goods from 35 percent to 5 percent. If the US responds positively, Cambodia will send a high-level delegation led by Sun Chanthol and Cham Nimul to negotiate further trade terms.

Responding to critics that the Prime Minister himself should personally intervene in trade negotiations, Mr Hun Manet said, “If His Excellency President Donald Trump was personally involved in the negotiations, then I would engage with him directly,” he remarked.

The Premier underscored the need for balanced trade discussions, urging the US to consider Cambodia’s economic position and existing commitments under the WTO. As Cambodia awaits Washington’s response, the government remains poised to engage in high-level talks to mitigate the impact of US tariffs on its economy.

Cambodia has expressed its readiness to negotiate with the US regarding the tariffs imposed on its goods. Speaking to Khmer Times, Anthony Galliano, Group CEO of Cambodian Investment Management, emphasized the significance of this step. “It is the right move as a start. Understandably, many countries are expressing dissatisfaction and outright complaining, threatening retaliation and escalation. Others are taking measures to reduce tariffs, deconstruct trade barriers, and negotiate in good faith,” he said.

“Whether you agree with the tariffs and the calculation method or not, the fact is there is a substantial trade deficit, and actions to address it positively with the administration are the right course at this time,” he added.

Anthony further pointed out that while the tariff situation remains uncertain, it also presents an opportunity for Cambodia to strengthen its economic position.

“While this is a very volatile and challenging event, it is subject to shifts and revisions and is potentially an opening salvo. However, it should be taken as an opportunity to address inequalities, structural deficiencies, and improve productivity and competitiveness,” he said.

The willingness to negotiate signals Cambodia’s proactive approach in managing trade relations with the US, aiming to mitigate economic risks while fostering long-term growth.

Lim Heng, Vice President of the Cambodia Chamber of Commerce, underscored the need for patience when assessing new tax policies and economic regulations.

Heng told Khmer Times, “In my view, any tax increase, any law that has been announced but has not yet come into effect, and any conclusions or assessments made at this stage seem premature and out of step with the current situation. It is incorrect to make definitive assessments too early.”

Citing past economic trends as a reminder of why waiting for concrete data is essential before drawing conclusions, he pointed to Cambodia’s diversified trade partnerships as a buffer against potential challenges posed by the US tax hike.

“Despite the US tax increase, Cambodia is not solely reliant on the US market. There are also European markets, the UK, Canada, and trade agreements with China, South Korea, the RCEP agreement, the Cambodia-Emirates agreement, and the United Arab Emirates – offering new market opportunities,” he said.

According to a report from the General Department of Customs and Excise of Cambodia, Cambodia’s exports to the US soared to nearly $10 billion from January to December 2024, marking an 11 percent increase compared to the previous year.

The report identified the US as Cambodia’s largest export destination, followed by Vietnam ($3.6 billion), China ($1.7 billion), Japan ($1.4 billion), Canada ($1.1 billion), and Spain ($1 billion).

It further noted that the bilateral trade volume between Cambodia and the US reached $10.18 billion in 2024, reflecting an 11.2 percent year-on-year increase. Of the total trade volume, Cambodia’s exports amounted to $9.9 billion, an 11.4 percent rise compared to 2023, the report stated.

khmertimeskh