US tariff set to shift Indochina economic balance with Myanmar, Laos worst hit

Under its latest Executive Order, "Further Modifying the Reciprocal Tariff Rates," Washington cut levies on Cambodian exports to 19 per cent from 36 per cent, a modest reprieve for Phnom Penh as it works to rebuild investor confidence and stabilise the country following its July 28 ceasefire with Thailand.

Cambodian political economist Dr Darin Duch said the kingdom, even amid global uncertainties, has many factories that are still operating, a sign that investor confidence remains steady.

"In a competitive landscape, ensuring that each one of Cambodia's competing neighbours continues to produce garments, travel goods, and bicycles for which Cambodia has already established a very efficient supply chain, Cambodia will remain competitive as a cost-effective and resilient manufacturing and sourcing base," he told Bernama.

He said Cambodia's young and cheap workforce, better logistics and infrastructure, and trade environment will work in its favour as manufacturers around the world look for stable and efficient supply chains.

US President Donald Trump's "Liberation Day" tariff policy, however, is likely to choke Myanmar and Laos, which are facing a staggering 40 per cent tariff--the highest in the ASEAN region.

Vietnam, the rising economic powerhouse in ASEAN, will face a 20 per cent export levy, much less than the 46 per cent tariff imposed earlier.

Myanmar with its political instability and natural disasters such as typhoons and earthquakes will struggle to navigate its economic woes.

The World Bank has forecast that Myanmar's gross domestic product growth this year will contract by 2.5 per cent following the huge earthquake that rocked the nation in March this year, which destroyed supply chains, farmlands, factories, and livelihoods.

"The high tariffs on Myanmar and Laos would probably cut into their export competitiveness, making production costlier and less attractive to global buyers.

"It may cause investment and production to move into friendlier countries with lower tariffs or a more favourable climate for business," said Darin.

Myanmar, already facing American sanctions since the military coup on February 1, 2021, mostly exports textiles and consumer goods to the US.

Its exports were only RM2.8 billion (US$657 million) in 2024, but the US remains an important market for the country.

Myanmar is preparing to hold its national elections in December this year.

Landlocked Laos exports agricultural products, especially Lao coffee, textiles, and light manufacturing goods to the US market.

Laos's exports were RM3.4 billion (US$803 million) in 2024.

Like Myanmar, Laos also suffers from natural calamities. Typhoon Wipha swept across the country this week, destroying over 2,000 homes and agricultural land in the provinces.

-- BERNAMA