Cambodia Must Strengthen Competitiveness, Not Rely on Tariff Preferences: CDC Official

Cambodia must focus on strengthening its international competitiveness rather than solely relying on tariff preferences, a senior official from the Council for the Development of Cambodia (CDC) has warned. Sun Chanthol, first vice-president of the CDC, stated at a July 27 press conference discussing the new US tariff rates on imports from Cambodia following the Section 301 trade investigation, that creating a superior investment environment is crucial for long-term economic growth. In April 2025, the Trump administration initially announced sweeping import tariffs on goods from around the world, with Cambodian exports facing potential tariffs of up to 49%. However, following negotiations between the Cambodian government and US officials, the proposed reciprocal tariff was reduced to 19%. The US Supreme Court's ruling later revoked the Trump administration's imposed reciprocal tariffs. Despite this, in July, the US government announced a new round of tariffs under Section 301 of the US Trade Act of 1974, imposing a 10% tariff on 17 countries, including Cambodia, Indonesia, and Malaysia. According to Chanthol, this 10% tariff is not added on top of the previously discussed 19%, but rather is applied alongside the Most Favored Nation (MFN) tariff, approved by the US Congress. Furthermore, a new "Excess Capacity" tariff is expected to be clarified within the next two to three months, affecting 16 countries, including Cambodia, Vietnam, Thailand, Malaysia, Indonesia, and China. Chanthol expressed confidence that the combined burden of the current 10% tariff and any future tariffs would not exceed 19% in total, given that Cambodia and the US signed a trade agreement in July 2025. He urged both the government and the private sector to further enhance Cambodia's competitiveness and its attractiveness as an investment destination. "We must continue making our own efforts and not rely solely on preferential tariff rates. We have to depend on ourselves by reducing production costs in Cambodia so that we can compete internationally," he emphasized. Prime Minister Hun Manet is reportedly working intensively to improve the Kingdom's investment climate through reforms such as simplifying business registration procedures, developing infrastructure, lowering logistics costs, expanding clean energy, and improving the quality of the workforce. Chanthol reiterated, "The future of our nation depends on our own efforts. If we fail to reform ourselves and rely only on tariff preferences, those preferences may one day disappear." Source: Phnom Penh Post