Cambodia deputy PM says 19% US tariff rate averts collapse of its garments manufacturing sector
PHNOM PENH: A tariff rate of 19 per cent on Cambodia's exports to the United States has helped it avert the collapse of its vital garment and footwear sector, allowing the country to remain competitive with its peers, its deputy prime minister told Reuters on Friday (Aug 1).
Sun Chanthol, Cambodia's top trade negotiator, thanked US President Donald Trump for his understanding in Cambodia's negotiations to reduce a tariff rate that had initially been set at 49 per cent hen later 36 per cent - among the world's highest levies - and for his intervention in a deadly conflict between Thailand and Cambodia.
"First off the bat I have to thank President Trump for providing a rate that's competitive vis-a-vis our neighbouring countries and express gratitude to President Trump for his noble intervention for a ceasefire and peace," Chanthol said in a phone interview.
"If the US maintained 49 per cent or 36 per cent, that industry would collapse in my opinion," he said of the garment and footwear manufacturing sector, the biggest economic driver in the country of 17.6 million people.
"People would go to Indonesia, Vietnam... a 16 per cent difference would have been huge. We can live with five per cent, anything around that. We are very grateful, for protecting our industry and its employees."
"We have close to one million workers, mainly women, each one of those workers supporting four to five members of their family. It would have been a huge impact if this would have been bad," he added.
Cambodia has a big trade surplus with the United States, with its exports to the US market accounting for 37.9 per cent of its total shipments in 2024, valued at close to US$10 billion, according to official data.
Much of that was textiles and shoes, a sector crucial to an economy projected by the International Monetary Fund to reach US$49.8 billion this year, driven by manufacturing of goods for brands that include Adidas, H&M, Ralph Lauren and Lacoste.
The deputy premier said what had been agreed with Washington was a framework, with a deal to be finalised later.
Chanthol also said Cambodia had agreed as part of the deal to buy 10 Boeing 737 MAX 8 aircraft for its national carrier Air Cambodia, with the option to purchase another 10.
"We don't have a lot of purchasing power compared to other countries," he said. "Our approach was we put everything on table, negotiate in good faith, ensure both countries will benefit from this trade deal." - Reuters
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