07/12/2025
US Tariff Rate of 36 Percent Seen as Pressure on Cambodia, Advantage for Vietnam
Rea more: https://english.cambodiadaily.com/2025/07/12/us-tariff-rate-of-36-percent-seen-as-pressure-on-cambodia-advantage-for-vietnam/
A leading Cambodian tax expert has warned that the United States’ new tariff rate of 36 percent on Cambodian exports could hinder China's backed infrastructure plans and push Cambodia deeper under Vietnam’s export shadow.
Speaking to The Cambodia Daily, tax specialist Pheng Borith said the disparity in U.S. import duties, 36 percent on Cambodia and 20 percent on Vietnam, will likely force Cambodian exports to rely on Vietnam as a gateway to the American market. Cambodia, he said, will struggle to export directly, even via its much-anticipated China-funded Funan Techo Canal.
According to Pheng Borith, the tariff difference not only places Cambodia at a disadvantage in export competition but also weakens its position in labor market competitiveness. Cambodian labor costs are already higher than Vietnam’s, and this new tariff will only deepen that gap.
He explained that if Cambodia wants to maintain access to the U.S. market with lower tariffs, it may have to channel goods through Vietnam, allowing Vietnamese firms to act as intermediaries. However, investors are likely already considering shifting their operations to Vietnam, where the tariff difference offers up to a 16 percent advantage.
The expert further warned that if the European Union decides to increase tariffs on Cambodian exports in 2026 from 20 to 30 percent, up to 80 percent of Cambodia’s economy could face serious disruption.
On July 7, 2025, U.S. President Donald Trump issued a letter revising tariff rates for several countries, including Cambodia. In that letter, he announced that tariffs on Cambodian exports would be reduced from 49 to 36 percent, effective from August 1.
Under the new rate, Cambodia is grouped with Thailand at 36 percent, but still ranks above Vietnam’s 20 percent. Other regional rates include Bangladesh at 35 percent, Indonesia at 32 percent, Malaysia and Singapore at 25 percent, Brunei at 24 percent and the Philippines at 18 percent. Laos and Myanmar face the highest rate at 40 percent.
Responding to the decision, Sun Chanthol, First Vice President of the Council for the Development of Cambodia, said the tariff reduction is a positive result of Cambodia’s sincere negotiations with U.S. trade officials. He noted that the new rate reflects a 13 percent decrease and marks a 26.5 percent drop from the April 2 tariff level, making Cambodia one of the top beneficiaries among over ten countries affected by the U.S. revisions.
Meanwhile, Casey Barnett, President of the American Chamber of Commerce in Cambodia, wrote on his page that the improved rate stems from Cambodia’s active engagement with U.S. trade representatives. He acknowledged, however, that Cambodia still trails Vietnam due to Hanoi’s tariff-free access for U.S. goods.
Despite the tariff reduction, Barnett noted that some factories in Cambodia are already eyeing relocation to countries with both lower labor costs and more favorable U.S. duties.
Khun Tharo, Program Manager at the Center for Alliance of Labor and Human Rights, told The Cambodia Daily that the new 36 percent tariff will likely affect Cambodia’s export growth and economic momentum in the short term.
He said the impact could be long-lasting, particularly for the garment and footwear sectors, which currently employ more than one million workers. Comparing Cambodia’s 36 percent rate with competitors across ASEAN, Tharo warned that the country could face mounting difficulties maintaining its export share to the U.S. market.
Still, he emphasized that Cambodia retains opportunities for further negotiation if the new tariff rate can be revised or adapted into a longer-term framework.
