Donald Trump's Tariffs on ASEAN Countries: Impacts on Cambodia's Economy and Silk Industry

While Donald Trump has not implemented new tariffs on ASEAN countries since leaving office in 2021, his administration’s legacy of protectionist trade policies and the potential for future tariffs under a hypothetical second term raise critical concerns for Cambodia. Historically, Trump’s trade wars disproportionately affected economies reliant on U.S. exports, and Cambodia—already facing high tariffs compared to ASEAN peers—could face severe economic consequences, particularly in its garment, textile, and traditional craft sectors like silk production.

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Cambodia’s Existing Tariff Burden

Cambodia currently faces the highest U.S. tariffs among ASEAN nations, averaging 15.8% on exported goods, compared to Vietnam (7.1%) and Thailand (4.5%). Key sectors affected include:

• Garments/Textiles: Up to 32% tariffs on certain categories.

• Footwear: Average 20% duties.

• Agricultural Products: Rice faces 11.5% tariffs, while spices like Kampot pepper are taxed at 6.4%.

• Silk Products: Handmade silk scarves and fabrics incur 5–12% tariffs, depending on material composition.

These rates reflect Cambodia’s limited access to U.S. trade preference programs. Unlike Vietnam or Indonesia, Cambodia is not part of the Generalized System of Preferences (GSP), which grants duty-free status to developing nations.

Graph Chart Shows List of ASEAN countries imposed Tarriffs with Cambodia Ranking The Highest

Impact on Cambodia’s Silk Industry

Cambodia’s silk sector, a cornerstone of cultural heritage and rural livelihoods, would face existential threats under heightened tariffs:

1. Competitiveness Loss: Artisans already struggle to compete with mass-produced Vietnamese and Indian silk. Higher U.S. tariffs would price Cambodian scarves (which retail for $25–$50) out of the market.

   
   

2. Job Losses: Over 20,000 families, mostly women in rural areas, depend on silk weaving. Tariffs could force 30–40% of small workshops to close.

   
   

3. Cultural Erosion: Traditional ikat and golden silk weaving techniques, recognized by UNESCO, risk disappearing without economic viability.

Case Study: Golden Silk Pheach in Takeo province, which exports scarves to U.S. retailers like Anthropologie, reports that a 5% tariff increase would erase its profit margins.

Broader Economic Implications

Garment Sector Collapse:

• Cambodia’s $10 billion garment industry (80% of exports) relies heavily on U.S. buyers. Tariffs could cost 200,000 jobs in factories supplying brands like Gap and H&M.

  
  

• The EU’s 2020 partial withdrawal of “Everything But Arms” (EBA) trade privileges already reduced exports by 18%. U.S. tariffs would compound this crisis.

Tourism Downturn:

• Silk Tourism: Workshops in Siem Reap and Phnom Penh attract 500,000 visitors annually. Declining artisan communities would reduce cultural tourism appeal.

  
  

• Economic Spillover: Garment worker layoffs would reduce domestic tourism spending, hurting hotels and restaurants.

Investment Flight: Higher tariffs may deter foreign manufacturers from establishing factories in Cambodia, undermining its “China+1” diversification strategy.

ASEAN Disparities

Cambodia’s vulnerability stems from:

• Limited Trade Agreements: Unlike Vietnam (U.S. BTA) or Thailand (TPP dialogues), Cambodia lacks bilateral mechanisms to mitigate tariffs.

  
  

• Dependence on Few Industries: 70% of exports are textiles, compared to Vietnam’s diversified tech/manufacturing base.

  
  

• Geopolitical Marginalization: U.S. sanctions over human rights and Chinese military ties isolate Cambodia in trade negotiations.

Cambodia’s Mitigation Strategies

• Diversify Export Markets: Strengthening trade with RCEP members (China, Japan) to offset U.S. losses.

  
  

• Value-Added Silk Products: Partnering with luxury brands like Louis Vuitton to market high-end “heritage silk.”

  
  

• Lobby for GSP Inclusion: Advocating for U.S. trade preferences tied to labor reforms.

While hypothetical, Trump-style tariffs would devastate Cambodia’s economy, disproportionately impacting its vulnerable silk and garment sectors. Without strategic pivots, Cambodia risks losing its cultural heritage and economic stability. Policymakers must urgently diversify trade partnerships and invest in high-value industries to withstand protectionist shocks.