Comment: What can Cambodia offer the US ahead of third round of tariff negotiations?

The Star

09-06-2025

PHNOM PENH: As Cambodia and the US prepare for a potential third round of negotiations regarding the heavy tariffs imposed on Cambodian goods, the stakes could not be higher for the Cambodian economy.
The current situation — where the US maintains a 49% tariff on a broad range of Cambodian exports — is unsustainable for a developing country that relies heavily on international trade. This trade barrier threatens not only Cambodia's economic stability but also its attractiveness as a regional investment destination.
The second round of negotiations ended without a concrete agreement, leaving both sides with open expectations and diplomatic uncertainty. As the third round approaches, Cambodia must reconsider its approach and think strategically about what it can offer the US — both as a gesture of goodwill and as a calculated move to regain economic advantage.
The US remains one of Cambodia's most important export markets. In 2023 alone, the Kingdom exported over $8 billion worth of goods to the US, primarily garments, footwear and travel goods. With the new tariffs, many of these goods are now subject to nearly 49% import tax — crippling their competitiveness in the US market.
Even more concerning is the broader implication: Chinese investors and manufacturers, who had shifted to Cambodia in previous years to avoid US-China trade disputes, are now beginning to pull out.
If Chinese businesspeople, who have been instrumental in building Cambodia's manufacturing base, decide to relocate to Vietnam, Indonesia or Bangladesh, the long-term damage to Cambodia's industrial ecosystem could be devastating.
It is clear that without a breakthrough in negotiations, Cambodia risks economic isolation and a significant loss in employment opportunities, foreign direct investment, and GDP growth. This is why Cambodia must consider making the first concession.
In diplomacy, small symbolic actions can unlock large strategic benefits. Cambodia must recognise that the US is not only negotiating as an economic power but also as a political actor with global norms and values.
The deterioration of Cambodia-US relations began in 2017, when the Cambodian government accused the US of supporting a 'colour revolution' and took a number of aggressive actions against the opposition, particularly the Cambodia National Rescue Party (CNRP).
Since then, several high-profile political activists with alleged ties to the United States have been arrested or exiled.
To move forward, Cambodia could consider making a political goodwill gesture before the third round of talks.
For example, the early or conditional release of certain political prisoners — particularly those with clear connections to US institutions or civil society organisations — could demonstrate a spirit of compromise.
This would not only help repair trust but also provide the US with a tangible outcome to present to its own domestic stakeholders, especially members of Congress who remain critical of Cambodia's human rights record.
The US has long maintained a dual-track policy toward Cambodia: one based on economic engagement and another focused on human rights and democratic governance. Unlike China, the US does not provide aid or investment without conditions. The US seeks reciprocity in political values — freedom of expression, multiparty democracy and rule of law.
Thus, even as Cambodia hopes for economic relief, it must understand that US negotiators are likely to push for more than trade concessions. They may seek reassurances on political reform, media freedom, and the reopening of democratic space. Pre-emptively addressing these concerns could help create a more favourable environment for the third round of discussions.
It is important for Cambodian leaders to see beyond short-term national pride and recognise the broader geostrategic context. While China remains Cambodia's closest political and economic ally, China itself is now looking for ways to stabilise its relationship with the US, especially in the trade sector.
China's priority is to show that it can be a strong and credible actor on the global stage. In this context, Cambodia must also demonstrate that it is a 'qualified friend' — not one that simply asks for help, but one that brings value to the relationship.
China wants to support strong, stable and strategically useful allies. If Cambodia appears diplomatically isolated or economically weak, even China's support may become more conditional.
The best way for Cambodia to prove its strength is to show that it can negotiate effectively with global powers like the US while maintaining its own dignity and national interests.
Cambodia's leadership has repeatedly emphasised national sovereignty and pride, which are valid principles. But diplomacy requires pragmatism. By taking a calculated step toward political openness, Cambodia stands to gain not only economic relief but also renewed credibility on the world stage.
This is not about surrendering national dignity — it is about safeguarding Cambodia's economic future. The third round of negotiations offers a narrow but real window of opportunity.
Cambodia should walk into that room not as a passive petitioner, but as a proactive and responsible partner ready to contribute to a shared solution.
The US is not asking Cambodia to become its ally against China. What it wants is clear: respect for democratic norms, transparent governance and political accountability. Offering the first concession — on Cambodia's own terms — could redefine the trajectory of bilateral relations for the better.
All in all, Cambodia is at a crossroads. The current trade impasse with the US must be resolved not through confrontation, but through strategic compromise. A well-thought-out gesture — particularly one rooted in political goodwill — could unlock immense economic and diplomatic benefits.
Now is the time for courage, not defiance. By showing a willingness to engage constructively, Cambodia can not only win favour in Washington but also retain the respect and support of its friend in Beijing.
This delicate balancing act requires wisdom, timing and a clear understanding of what Cambodia must give in order to get what it truly needs. - The Phnom Penh Post/ANN
*** Seun Sam is a policy analyst at the Royal Academy of Cambodia. The views and opinions expressed are his own.