On April 2, 2025, former President Donald J. Trump announced the implementation of reciprocal tariffs on imported goods from Cambodia, setting the rate at a striking 47%. This bold move has sent ripples through international trade circles, prompting immediate reactions from the Cambodian government. In a swift response, the Cambodian administration convened a meeting with relevant public and private sector stakeholders to address the implications of this tariff hike.
By April 4, 2025, Prime Minister Hun Manet of Cambodia had taken the initiative to send a letter directly to President Trump, requesting a dialogue aimed at expanding trade relations. In his correspondence, Hun Manet proposed that Cambodia would cap its import tariffs on U.S. goods at 35% and urged the U.S. to reconsider the enforcement of the new reciprocal tariffs to foster a more collaborative trade environment.
In a show of good faith, Cambodia is also adjusting its import tariffs on 19 specific items from the United States, reducing them from 35% to just 5%. This list includes various consumer goods and vehicles, such as frozen beef and pork, poultry by-products, dairy products, grains like almonds and corn, syrup, sugar, frozen potatoes, processed seeds, whiskey, heavy trucks under five tons, and motorcycles with engines over 800cc.
According to the General Department of Customs and Excise of Cambodia (GDCE), the trade value between Cambodia and the United States reached a staggering $10.18 billion in 2024, marking an 11.2% increase from the previous year. Cambodia exported goods worth $9.92 billion to the U.S. (an increase of 11.4%), while imports from the U.S. stood at $264.15 million (up by 2.7%). This resulted in a significant trade surplus of $9.65 billion for Cambodia.
Experts note that the "America First" policy championed by Trump has profoundly affected international trade dynamics, especially for smaller nations like Cambodia. The country finds itself in a delicate balancing act, needing to maintain its relations with both the U.S. and China, as Chinese investors play a crucial role in Cambodia's economy. With the U.S. as a primary export market, Cambodia is keen on negotiating lower tariffs and engaging in proactive diplomacy to safeguard its long-term interests.
However, the stakes are high. Should negotiations falter, Cambodia's textile and footwear industries, heavily reliant on the U.S. market, could face severe repercussions. Such uncertainty in trade could deter foreign direct investment (FDI), compelling businesses to relocate to neighboring countries with more favorable trading conditions. Thus, Cambodian businesses are advised to closely monitor developments and strategize accordingly.
In a related development, Trump has reiterated his commitment to bringing manufacturing back to the U.S., particularly focusing on tech giants like Apple. In his latest statements, he expressed confidence that Apple could feasibly manufacture its flagship products, including the iPhone, on American soil. Yet, analysts like Dan Ives from Wedbush Securities have raised concerns, estimating that producing iPhones domestically could inflate costs by up to $3,500 each.
Trump's spokesperson, Karoline Leavitt, echoed his sentiments, stating, "Trump believes that America has the potential, capabilities, and resources to manage the production domestically." This ambitious vision is supported by a reported $500 million investment in infrastructure, aimed at reinforcing the American economy.
However, the practicality of relocating iPhone production to the U.S. remains contentious. Apple CEO Tim Cook has previously highlighted the complexities involved in such a shift, noting that the decision to manufacture in China is not solely based on lower labor costs, but on the technical expertise and supply chain efficiencies available in that region. Cook remarked, "In China, there is a skilled workforce with advanced tools and precision manufacturing capabilities that we do not find in the U.S. in the necessary quantities."
Historically, Apple has faced numerous challenges when attempting to manufacture in the U.S., as seen during Trump's first term when the company sought to produce its Mac Pro in Texas. This initiative encountered various hurdles, including logistical delays and a shortage of qualified labor, ultimately revealing the complexities of domestic production.
While the $500 million investment announced by Apple is significant, it primarily pertains to infrastructure for private sector services, such as cloud computing, rather than consumer device assembly. The implications of this investment are thus quite different from the production of iPhones, which relies on a global supply chain spanning over 50 countries.
As the conversation around domestic production intensifies, experts predict that the challenges of high labor costs, insufficient specialized production capacity, and a lack of necessary expertise will hinder the feasibility of manufacturing iPhones in the U.S. in the near future. Instead, Apple is expected to continue diversifying its production locations, with an increased focus on India, where import tariffs are lower, and a robust supply chain is developing.
In summary, the ongoing trade tensions between the U.S. and Cambodia, alongside the broader implications of Trump's manufacturing policies, highlight a complex landscape of international trade and economic diplomacy. As both nations navigate these challenges, the outcomes of their negotiations will have significant ramifications for their respective economies, particularly in sectors that are heavily reliant on cross-border trade.
