Speakers and industrial representatives gathered at the ‘Market Updates: Current Tax Hot Topics’ forum, which was hosted by the International Business Chamber Cambodia. Hong Raksmey
The US proposal to impose a 49% “reciprocal” tariff on Cambodian exports has sparked concerns among industry insiders, as the economy faces the uncertainties they brings to the Kingdom’s key export industries.
Speaking at the “Market Updates: Current Tax Hot Topics” forum, hosted by the International Business Chamber of Cambodia (IBC) at the KPMG Cambodia office on April 23, industry experts unpacked the implications of Washington’s latest move.
The event included a special focus on the proposed US tariff measures and how they could impact Cambodia’s trade-dependent economy.
The implementation of the proposed tariff rate, announced earlier this month by President Donald Trump, has been delayed for 90 days — in a move, described as a “window for negotiation”.
The policy is viewed as part of a broader US strategy to pressure Asian nations on trade practices and bring more manufacturing back to American soil.
“From January 2024 to January 2025, Cambodia exported $12.8 billion worth of goods to the US, which accounts for 38% of our total exports,” said So Dary, head of Corporate Services, KPMG in Cambodia.
“That includes garments, rubber, plastic and leather products. A 49% tariff will have significant consequences for our economy and the many investors tied to the US market,” she added.
So Dary, head of Corporate Services at KPMG in Cambodia, makes a presentation on possible US reciprocal tariffs. Hong Raksmey
Dary explained that understanding the rules of origin and harmonised system (HS) codes for export goods will be crucial in the months ahead.
Products classified under certain HS codes could be subject to different tariff levels, depending on their classification and country of origin.
“Businesses need to reassess contracts, supply chains and documentation. Ensuring that a product qualifies as ‘Made in Cambodia’ under both Cambodian and US standards could make a crucial difference in tariff rates,” she noted.
Adding to the complexity, nearly 47% of Cambodia’s imported materials originate from China, raising fears that products assembled in Cambodia using Chinese components may also face higher tariffs if the US targets goods with heavy Chinese supply chain involvement.
James Roberts, head of Advisory at KPMG in Cambodia delivers his remarks during the “Market Updates: Current Tax Hot Topics” forum, held in Phnom Penh on April 23. Hong Raksmey
James Roberts, head of Advisory at KPMG in Cambodia, painted a picture of global economic tension.
“We’re operating in a time of uncertainty. Tariffs are being used as instruments of negotiation, but the fallout is felt in places like Cambodia,” he explained.
“When elephants fight, the grass suffers — and we are the grass. The supply chain exposure to China is a key risk for Cambodian businesses,” he continued.
He also noted that the impact of tariffs is not confined to Cambodia.
“Tariffs drive up prices in the US, leading to inflation, not industrial revival. A T-shirt that costs $1 to make in Cambodia cannot be replaced by a $20 American-made equivalent overnight. The cost will simply rise, and consumers will pay more,” Roberts said.
He believed Vietnam’s response to similar pressures was highlighted as a model. Vietnam engaged proactively with US policymakers and adjusted domestic policies to strengthen trade ties, including slashing tariffs on American goods and committing to major purchases of US exports like aircraft.
“Vietnam had lobbyists in place, and they acted quickly. Cambodia will need to adopt a similarly strategic approach if we want to preserve market access and investor confidence,” he added.
While the proposed tariff rate remains in the negotiation phase, both speakers emphasised the importance of immediate risk assessment and contingency planning.
From recalibrating supply chains to revisiting legal frameworks and transfer pricing documentation, companies were urged to act now rather than wait for the final US decision.
Dary also noted that Cambodia’s broader economy remains on a growth path, with GDP expected to rise by 5.5% this year to $31.6 billion.
Total exports grew 15.7% to $26.7 billion in 2024, driven by strong demand from the US in particular. However, that growth is now in jeopardy.
“This growth reflects the resilience of our manufacturing sector, but the new US tariff plan puts us at a crossroads,” she said.
As Cambodia navigates these uncertain waters, business leaders and analysts alike say the key will be agility, diplomacy and thorough preparation.
“This isn’t a time to panic, but it is a time to prepare,” Roberts concluded. “Monitor your exposure, diversify where possible and be ready to adapt.”
The coming weeks will be critical as US-Cambodia negotiations continue and businesses brace for potential changes that may reshape Cambodia’s economic landscape.
