Lor Vichet, vice-president of the Cambodia Chinese Commerce Association (CCCA), discussed possible positive outcomes of the upcoming tariff negotiations. Supplied
Since US president Donald Trump announced new “reciprocal tariffs” for countries around the globe, more than 50 countries have reached out to the US for negotiations, including Cambodia. The goal is to reduce the level of tariffs imposed on goods imported to the world’s biggest economy. Cambodia, which was hit with 49%, the highest in ASEAN, has proposed reducing tariffs on US goods to as low as 5%.
The Post sat down with Lor Vichet, vice-president of the Cambodia Chinese Commerce Association (CCCA), to understand more on what can be done to improve the situation.
Could you briefly describe Trump calculated the latest tariff rates for so many countries around the globe on what he called “Liberation Day” for America on April 2?
The trade war began during Trump’s first time, although at that time it was between the US and China. Under his second term – Trump 2.0 – the trade deficits between the US and many other countries have pushed him to revise some policies, presumably to improve the terms of trade.
Therefore, he launched the new policy, so that negotiations can begin, to create conditions where the US’s international trade produces more benefits than under the previous administration.
What do 49% tariffs mean for Cambodia?
According to his new executive order, the maximum tariff for Cambodia is over 40%. Cambodia charges no more than 35% on US goods when they are imported here. This doesn’t mean that all US products imported to Cambodia are taxed at 35%. It will be the same for Cambodian goods that are exported to the US – the maximum may be 49%, but this will not apply to all goods. If Cambodian goods aren’t exported to the US, the tariffs won’t affect them.
We have to wait and see what the US customs authorities inform the General Department of Customs and Excise of Cambodia. Then we will know what items will be taxed and by how much.
It is important to study this, as the first step in planning our negotiations with the US. Cambodia already took the first step by agreeing to reduce the tariffs on 19 categories of US import. This was an act of goodwill by Cambodia, and should ease the situation and reduce tensions.
What benefits does the Trump administration gain from the tariff increases?
There are some benefits from this tariff increase. The first one is the opportunity to renegotiate with all of their trading partners. Many countries have already begun negotiations to reduce the tariffs. Trump wants to see better trade conditions with other countries, through reduced tariffs on US goods.
If this is possible, it will create more jobs in the US. As the US is already an advanced economy, most factories are outside of the US, meaning the US is buying products from other countries and creating jobs overseas, rather than at home.
Trump wants to change this way of trading so that more companies open factories in to the US, creating jobs for US citizens. He also wants to make US exports more competitive in foreign markets, by reducing the tariffs that are charged on them.
What are some of the possible gains and losses for Cambodia?
To determine that, we first need to see a list of products and how much the tariffs will be on each one. If the US increases tariffs on items that we do not export to there, the increase will not matter – there will be no impact. If the tariffs are on goods that we send to the US, then we will need to negotiate. Obviously, negotiation normally involves compromise, with both sides requesting that tariffs on their respective goods are reduced.
In addition, it is worth noting that reduced tariffs on US imports to Cambodia will benefit Cambodian consumers. For example, if an American vehicle, say one from Ford or General Motors, previously cost $70,000, post-negotiations, it may cost $50,000.
This will be welcome news to Cambodian consumers who prefer US goods, which are generally high-quality and have a good reputation.
What should be the next step, so that both sides can improve trade relations?
The new tariffs are also being applied to our neighbours, like Vietnam and Thailand. The US is Cambodia’s biggest market. We need to increase the volume of trade between us.
To achieve this, tariffs must be lowered for both sides, so we all win. I think this should be the basis for both sides to work on increasing trade volume year-on-year.
I believe this is an opportunity for both countries to come to the table and discuss ways to improve their terms of trade. This is a great chance to improve our relations.
Negotiation paves the way forward and also avoids demagoguery by politicians. I am certain that negotiations will lead both countries to prosperity and increase trade volume, beginning a new chapter for trade between the US and Cambodia.
This interview has been edited for brevity and clarity.
