The Office of the US Trade Representative (USTR) have imposed a 10% tariff on Cambodian goods following its Section 301 investigation, while Thailand and Viet Nam were among 38 countries hit with a higher 12.5% tariff, according to former American Chamber of Commerce in Cambodia (AmCham) president Casey Barnett.

Barnett revealed details of the USTR’s latest tariff schedule on Friday morning, noting that Cambodia also secured several important exemptions. Among them is duty-free treatment for products that cannot be produced in the US, including cashew nuts.

More significantly, the US has introduced a special tariff exemption for Cambodian garment exports based on the volume of US-produced cotton or cotton fabric used in their manufacture. The measure is intended to encourage American cotton production while reducing reliance on Chinese textile inputs.

“This is both an opportunity and a risk” for Cambodia, Barnett said.

According to him, Cambodia exported $4 billion worth of garments to the US in 2025. During the same year, Cambodia imported $2.8 billion worth of cotton and fabric from China, which were used to manufacture garments exported to the US and EU.

By contrast, Cambodia imported only $137,000 worth of US cotton and fabric he noted — a negligible amount.

Barnett warned that in the short-term Cambodia could lose garment orders to Indonesia and Bangladesh, which also received a 10% US tariff, while benefiting from similar garment-related exemptions.

Both countries are major competitors in the global garment industry and already possess substantial domestic textile manufacturing capacity, whereas Cambodia lacks a large-scale fabric production industry.

“As a result, Cambodia must move quickly to attract investment in textile manufacturing. Otherwise, it risks gradually losing export orders,” Barnett said, pointing to Cambodia’s relatively high electricity prices and lengthy environmental impact assessment procedures as key obstacles to new investment.

He added that Cambodia also faces both risks and opportunities from a second round of tariffs expected to be announced by the USTR in response to its Section 301 investigation into excess industrial capacity. Those measures are expected within the next two months.

“Cambodia may receive favourable treatment under the next tariff package, but it could also be required to reduce its dependence on Chinese raw materials,” he said.

Barnett added that after the excess-capacity tariffs are announced, the USTR is expected to resume discussions with Cambodia on a proposed Agreement on Reciprocal Trade, with the aim of finalising revisions before seeking ratification by Cambodia’s National Assembly.

He warned that the Kingdom’s garment sector faces another challenge: the lack of visible progress toward a free trade agreement (FTA) with the EU.

“Cambodia is expected to lose its remaining Everything But Arms (EBA) trade preferences with the EU in the near future,” he said.

“Global brands are unlikely to expand sourcing from Cambodia unless they see tangible progress toward an FTA or another preferential trade arrangement once the EBA scheme expires,” he noted.

Source: Phnompenhpost