Cambodia holds trade talks with US as 49% tariff weighs on outlook

CAMBODIA has held its first round of trade talks with the United States in Washington, its government said on Thursday, as it tries to negotiate over one of the highest tariff rates imposed by the Trump administration.

AI Brief

Cambodia risks economic harm if it can't reduce a steep 49 pct US tariff on its vital textile and footwear exports.
Trade talks between Cambodia and the US were held constructively, with a second round planned for early June.
Exports to the US are critical, making up nearly 38 pct of Cambodias shipments in 2024, mostly garments and footwear.

The United States is Cambodia's biggest export market, with the Southeast Asian country facing major implications for its crucial textiles and footwear manufacturing sector if it is unable to negotiate a reduction in a 49% tariff rate.

"Both sides exchanged their views in a frank and constructive manner in an atmosphere of mutual understanding on ways to further strengthen bilateral trade and investment," Cambodia's government said in a statement, adding a second round of talks would be held in early June.

It made no mention of the tariffs and said talks were held between its Deputy Prime Minister Sun Chanthol, Commerce Minister Cham Nimul and Sarah Ellerman, the assistant U.S. trade representative for Southeast Asia and the Pacific.

The Office of the U.S. Trade Representative did not immediately respond to a request for comment outside of regular working hours.

Cambodia's 49% tariff rate is the highest of the Southeast Asian countries affected, which are among those hardest hit.

Moody's last month changed its outlook for Cambodia to negative from stable, citing downside risks to its growth prospects given the uncertainty over the U.S. tariffs.

Cambodia has a big trade surplus with the United States, with its exports to the U.S. market accounting for 37.9% of its total shipments in 2024, which were valued at close to $10 billion, according to official data.

Much of that was garments and footwear, a sector vital to its $49.8 billion economy and a key source of employment in manufacturing goods for brands that include Adidas, H&M, Ralph Lauren and Lacoste.