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This is a B2B Cambodia Special Market Update on 9 July 2025, Anthony Galliano, Group CEO of Cambodian Investment Management(CIM), explains the advancement of the discussions on tariff with the United States as Prime Minister Hun Manet received a letter from Trump.
Watch the video in English above.
- Following the trade deal struck with Vietnam, whereby there is a 20% U.S. tariff on Vietnamese goods and 40% on transshipped goods, the administration sent official “tariff letters” to 14 countries on July 8th advising them that new reciprocal tariffs would kick in on August 1. The administration issued letters to leaders in 14 countries, including Japan, South Korea, Myanmar, Laos, Thailand, Cambodia, Bangladesh, Serbia, Indonesia, South Africa, Tunisia, Kazakhstan, Malaysia, and Bosnia & Herzegovina, informing them of impending tariff hikes, ranging 25–40%, scheduled for activation on August 1. The previously looming July 9 deadline for tariff implementation was extended to August 1 to afford more time for further negotiations.
- In a letter dated July 7th to Prime Minister Hun Manet, the president of the United States stated the letter “demonstrates the strength and commitment of our Trading Relationship and the fact that the United States of America has agreed to continue working with Cambodia, despite having a significant Trade Deficit with your great Country”. The letter further advised “Our relationship has been unfortunately far from Reciprocal. Starting from August 1st, 2025, we will charge Cambodia a Tariff of only 36% on any and Cambodian products sent into the United States, separate from Sectoral Tariffs. Good transshipped to evade higher Tariffs will be subject to higher Tariff.” The president cited that the countries had years to discuss their trading relationship and that Tariff and Non-Tariff Polices, and Trade Barriers are the reasons to move away form long-term and very persistent Trade Deficits with Cambodia. The rational of the 36% Tariff charged were to correct the unsustainable trade deficits due to Cambodia’s Tariffs, and Non-Tariff Polices and Trade Barriers.
- The president cautioned that if Cambodia decided to raise its Tariffs, then whatever the number chosen to raise the tariffs, will be added to the 36% that the United States charges. While there was optimism prior to the issuance of the letter, the 36% tariff on Cambodia was a surprise and is quite serious as a trade deal has yet to close, leaving the country exposed. Cambodia faces one of the region’s highest tariffs, on par with Thailand but worse than Vietnam, Malaysia, and Indonesia. U.S.-ASEAN trade tensions could push more sourcing to other markets or countries not in the administration’s tariff wave .On positive note the tariff rate is greatly reduced from the 49% tariff initially announced on April 2nd. The effective date of the 36% tariff is August 1st, leaving room for further negotiation prior to its imposition. Sun Chanthol, Deputy Prime Minister and First Vice-President of the Council for the Development of Cambodia, who is leading the trade negotiations with the United States said “At this point, we have been very successful in negotiating this rate with the United States, and this achievement is the result of good-faith negotiations, as highlighted by Prime Minister Hun Manet.” He stated that the decision is not yet final, as a letter from US President Donald Trump has “left the door open” for further discussions before the new tariff takes effect. “Our team stands ready to engage further with the United States to seek an additional reduction in the reciprocal tariff rate. It is important to stress that this tariff rate has not yet been finalised, we still have the opportunity to negotiate.”
- The Dow Jones Industrial average dropped 165 points or ,37% on the day of the announcement. The closely watched U.S. 10 Year Treasury Note, which closed at a yield of 4.34% on Friday, is now trading at 4.40%. The bond market, specifically the U.S. 10 Year treasury yield is one of the most closely watched indicators of the markets reaction and has caused the administration to reverse course on tariffs, or at least pause them. Despite aggressive threats, markets have reacted relatively calmly, suggesting traders believe Trump may delay or negotiate before actually imposing tariffs.