Cambodia has sought to play down the impact of fresh US tariffs on its exports, insisting that its commitment to tackling forced labour helped secure a lower rate than many competitors.

Yet industry voices warn that the country’s garment sector still faces significant challenges.

On 23 July, Washington imposed a 10% tariff on goods from Cambodia and 59 other nations under Section 301 of the Trade Act, citing failures to enforce bans on imports produced with forced labour. While some countries face a 12.5% rate, Cambodia’s was set lower after pledging reforms and signing a reciprocal trade agreement with the US last year.

Commerce Ministry spokesperson Pen Sovicheat said the measure “would not seriously affect Cambodia’s major market, the US”, noting it follows a 19% tax introduced in 2025. He stressed that Cambodia had demonstrated “steadfast commitment” to addressing concerns during the investigation.

The tariff applies to exports including garments, footwear and travel goods, with scrutiny on supply chains involving cotton, rice, fish and aluminium. Cambodia has introduced new regulations banning imports of goods linked to forced labour, aiming to reassure trading partners and protect its export base.

Industry representatives remain cautious. Kaing Monika of the Textile, Apparel, Footwear and Travel Goods Association said the action was not aimed directly at Cambodia’s factories but at ensuring countries block forced labour inputs from entering domestic supply chains. He argued Cambodia’s legal steps show alignment with international standards.

Casey Barnett, President of AmCham Cambodia, described the decision as both an opportunity and a risk. While Cambodia enjoys a relative advantage over rivals such as Thailand and Vietnam, which face higher tariffs, he warned that reliance on Chinese raw materials could undermine competitiveness. In 2025, Cambodia imported $2.8 billion worth of cotton and fabric from China, compared with just $137,000 from the US.

Barnett cautioned that without investment in domestic textile production, Cambodia could lose orders to Indonesia and Bangladesh, which also face 10% tariffs but have stronger industries. He added that high energy costs, regulatory hurdles and uncertainty over EU trade preferences further cloud the outlook.

For now, Cambodia has avoided the harshest penalties. But with another round of tariffs expected within months, the country’s garment sector must adapt quickly to secure its place in global supply chains.

-2026-07-27