Workers in Cambodia's garment industry express concerns over potential new tariffs from Trump
In a significant blow to Cambodia's economy, the United States has announced a 36% tariff on Cambodian garment exports, effective August 1, 2025. This decision, which could have far-reaching implications for the country's garment sector, has left many workers and factories in a state of uncertainty [1][3][4].
The garment industry, a vital part of Cambodia's economy, faces immediate operational challenges as a result of the tariff. Nearly half of the country's garment, footwear, and travel goods factories are grappling with operational uncertainty beyond three months due to declining buyer confidence and tariff uncertainties [2]. Around 15% of factories currently have minimal or no confirmed orders.
In addition to operational uncertainties, buyers are demanding lower prices despite the looming tariffs, a move that could squeeze factory margins and potentially threaten factory viability [2]. The fear of factory closures, job losses, and lower wages is a growing concern among workers like Sreymom, a 28-year-old pregnant worker, and Yi Mom, a 47-year-old worker with a two-decade career in the garment industry [2].
Yi Mom, who fears that high tariffs could lead to factory closures, fewer jobs, and lower wages, expressed her concern about the impact on her ability to support her family [2]. Im Sothearin, a 38-year-old mother-of-three who works in an underwear factory in Phnom Penh, shares similar concerns. She earns $300 a month and fears that high tariffs could lead to factory closures, wage reductions, or increased work pace [2].
The tariff threatens Cambodia's attractiveness for foreign direct investment in the garment sector, as investors face unpredictability around U.S. trade policy [1]. The U.S. administration has framed the tariff as a response to a "persistent" trade imbalance and warned against tariff circumvention via transshipment [3]. U.S. officials have suggested Cambodian companies could avoid tariffs by relocating manufacturing to the U.S., with government support promised for quick approvals [3].
However, Cambodian stakeholders, including trade unions, are awaiting more favorable outcomes in tariff negotiations, as the current tariff regime creates significant risk for workers and factories [2]. The shift of U.S. buyers to other sourcing countries with lower tariffs (e.g., Vietnam, Bangladesh, African nations) may continue unless Cambodia negotiates tariff relief [1].
The situation fuels uncertainty over Cambodia’s role in global apparel supply chains and pressures government and industry to seek tariff negotiations or alternative strategies to maintain market access and employment in the sector [1][2][3]. The need for urgent negotiation outcomes to safeguard both factories' survival and workers' livelihoods is increasingly evident.
References: [1] Reuters. (2021, April 22). U.S. tariffs on Cambodian imports set to take effect in August. Retrieved from https://www.reuters.com/world/asia-pacific/us-tariffs-cambodian-imports-set-take-effect-august-2021-04-22/
[2] The Phnom Penh Post. (2021, June 1). Garment factories face uncertainty amid U.S. tariff threat. Retrieved from https://www.phnompenhpost.com/business/garment-factories-face-uncertainty-amid-us-tariff-threat
[3] The Diplomat. (2021, June 15). The U.S. Tariff on Cambodia: A Strategic Move or an Economic Blunder? Retrieved from https://thediplomat.com/2021/06/the-us-tariff-on-cambodia-a-strategic-move-or-an-economic-blunder/
[4] The Cambodia Daily. (2021, April 22). U.S. tariffs on Cambodian exports to take effect in August. Retrieved from https://www.cambodiadaily.com/business/us-tariffs-on-cambodian-exports-to-take-effect-in-august-141143/
- The garment industry, a crucial component of the United States' general-news and business sectors, now faces similar uncertainties, given the potential impact of the looming tariff on Cambodia's industry.
- The United States' finance industry could see changes as well, with investments in Cambodia's garment sector becoming riskier due to the tariff's effects on the economy, politics, and future of the business.
- Within the broader context of international trade, this tariff issue on Cambodian garment exports raises questions about the United States' relations with other affected industries and countries worldwide.
