Why Cambodia’s tariff ‘peace offering’ may fail to halt Trump’s trade axe

As one of the main targets of Donald Trump’s threatened tariffs on Southeast Asia, Cambodia has scrambled to de-escalate trade tensions with the United States, but its drastic reduction of levies on American goods is not expected to placate Washington. Amid a whirlwind week of announcements, the Trump administration initially slapped a 49 per cent tariff on Cambodian imports, only to reverse its decision days later, delaying the measures for all countries except China by 90 days. The initial announcement prompted Cambodian Prime Minister Hun Manet to write to Trump, stating Phnom Penh’s willingness to slash import taxes on a selection of US goods, according to local media. In the letter, which he later shared on social media, Hun Manet said that Cambodia would reduce tariffs on 19 American product categories from 35 to 5 per cent “in the spirit of strengthening our bilateral trade relations”. “In this regard, I have also tasked my Minister of Commerce to correlate with the US Trade Representative,” the letter added. Facing a global market meltdown, Trump abruptly backed down on tariffs for most nations on Wednesday, granting a 90-day reprieve – even as he jacked up the tax rate on Chinese imports to more than 125 per cent. Bunna Vann, head of research and advocacy at the Cambodian Youth Network Association, described Cambodia’s tariff reduction as a clear attempt to ease trade tensions. “[It] signals Cambodia’s willingness to engage in negotiations and foster better trade relations with the US,” Vann said, noting Washington’s decision to delay the proposed tariffs. However, Cambodia-American political scientist Sophal Ear, an associate professor at Arizona State University’s Thunderbird School of Global Management, argued that Cambodia’s “peace offering” fell short. “[It] failed to offer what would truly get the Trump administration’s attention: zeroing out tariffs entirely, including on automobiles, a priority for Trump,” he said. “The exclusion of automobiles was particularly shortsighted. Offering a 5 per cent tariff cap on goods while maintaining protections on politically sensitive items won’t cut it with an administration that views trade punitively and negotiates transactionally.” These actions only deepen the dependence of vulnerable states like Cambodia on Beijing Sophal Ear, Cambodia-American political scientist Ear said that Phnom Penh had failed to fully grasp the stakes or the diplomatic approach of the Trump administration. Given Cambodia’s already close economic ties with China, he predicted that Trump’s tariffs would further accelerate Phnom Penh’s alignment with Beijing. “While Washington wants to counter Chinese influence in Southeast Asia, these actions only deepen the dependence of vulnerable states like Cambodia on Beijing,” he added. Although Vann said China could not fully replace Cambodia’s exports to the US, he said the two Asian neighbour’s close economic relationship left limited room for further trade expansion. Cambodia has enjoyed increasingly warm ties with China in recent years, with bilateral trade between the two nations reaching nearly US$14 billion between January and November 2024, a 24 per cent increase compared with the same period in 2023. Last year alone, Cambodia approved 414 Chinese investment projects worth US$6.9 billion, representing almost half – 49.82 per cent – of all foreign investment in the country. Chhengpor Aun, a research fellow at The Future Forum think tank, said the 90-day reprieve offered “breathing room, even a lifeline” for Cambodian negotiators and planners, allowing them to engage with Trump’s trade team and develop fiscal and domestic economic intervention strategies. In the short term, however, Aun said Cambodia had little choice but to yield to US demands. The tariff threat came at a time when “the new generation of Cambodian leadership is yearning for economic prosperity to enhance their legitimacy through performance – thus the stakes are too high for them,” he said. Hun Manet became Cambodia’s prime minister in August 2023, succeeding his father, Hun Sen, who ruled from 1985 to 2023. “Cambodia’s highest priority is to get President Trump and his trade team on the line or at the table to talk, [but] the problem is how. Many countries must be doing the same,” Aun said. While some members of the Association of Southeast Asian Nations – including Malaysia, Singapore, Indonesia, Philippines and Brunei – are reportedly seeking a coordinated response to the crisis, Cambodia is not involved in such efforts. Ear said that joining a unified Asean response would “almost certainly strengthen Cambodia’s position” and reduce the perception that Phnom Penh was “isolated and scrambling”. “By moving with the herd, Cambodia can shield itself from some of the worst blows and possibly extract concessions it could never gain alone,” Ear said. However, he conceded that Cambodia’s close alignment with Beijing made it “a less credible participant in a unified front”. Aun from The Future Forum suggested that Cambodia should collaborate with other Asean members to develop a long-term trade strategy, which would include “de-risking from major superpowers like the US and China by both diversifying export markets and increasing intra-Asean trade.” He highlighted Asean’s structural limitations, noting that unlike the European Union, the bloc lacked strong institutional mechanisms and regional integration for effective collective bargaining. Over-reliance on a rotating chairmanship, rather than a “full-time, well-oiled, and empowered secretariat”, had diminished Asean’s influence, Aun said.

Why Cambodia’s tariff ‘peace offering’ may fail to halt Trump’s trade axe

Phnom Penh has offered to slash import taxes, but analysts warn it could still miss the mark with a transactional Trump administration