US Tariff Uncertainty Threatens Cambodia’s Garment Industry

[geovalin]

KT Sokunthea

 

Cambodia’s vital garment sector is facing short-term disruption, with nearly half of factories uncertain about their operations beyond the next three months, according to a new industry survey. Mounting concern over US tariff policies and faltering buyer confidence is placing unprecedented pressure on the country’s top export earner.

 

The survey, published on 27 June by Better Factories Cambodia (BFC), in partnership with the ILO and the International Finance Corporation, found that while most factories still have short-term orders, 44% said they could only maintain current operations for another three months. Around 15% have no confirmed orders or only enough for the coming weeks.

 

Conducted among 203 factories, the findings paint a cautious but concerning picture. While over half reported confirmed orders through to the end of the year, many buyers are holding off on longer-term commitments due to uncertainty over US tariffs. The United States remains Cambodia’s most important trading partner—absorbing over 91% of garment exports in early 2025—yet it also imposes the region’s highest reciprocal tariff, at 49%.

 

Ken Loo, Secretary General of the Textile, Apparel, Footwear and Travel Goods Association of Cambodia, confirmed that buyer hesitation is linked to uncertainty in Washington. “Many buyers have not placed orders for the later part of the year,” he said. “They are waiting for more certainty regarding the US tariffs.”

 

Workers, too, are bracing for impact. Yang Sophorn, President of the Cambodian Alliance of Trade Unions, warned that stalled negotiations could lead to closures and job losses. “It will impact workers directly and indirectly,” she said. “Some factories may shut down or relocate.”

 

The sector, which employed over 918,000 Cambodians in 2024 and exported $13.6 billion worth of goods, is also facing a labour shortage.

 

Sophorn noted that some factories are struggling to retain skilled workers, as employees seek better pay and conditions elsewhere.

 

To adapt, 26% of surveyed factories are seeking new customers outside the US. Others are investing in automation, enhancing worker training, and expanding recruitment in a bid to stay afloat.

 

Despite current headwinds, many factories remain cautiously optimistic. But with tariff negotiations in limbo and global demand faltering, the months ahead may prove decisive for Cambodia’s most critical industry.

 

-2025-07-04

[Mo Sawadee]

What’s the impact of US goods entering the Country? Probably very little… not with US wages….