Translated by Federico Emanuele
In recent months, Cambodia has become a surprising protagonist in a new phase of the trade war between the United States and China. The small Southeast Asian state now finds itself among the central players in a global economic conflict that, while not directly targeting it, is profoundly affecting its economy, foreign policy, and geopolitical position. In fact, tariffs imposed by the Trump administration have hit Cambodia particularly hard, reaching up to 49% on a wide range of goods imported from the country.
Washington has justified the move as a necessary step to counter unfair trade practices. However, it is widely interpreted as a strategic maneuver aimed at indirectly targeting China, which stands accused of using third countries—such as Cambodia—to circumvent U.S. tariffs. This practice, known as transshipment, involves rerouting Chinese production to factories located in nations not subject to trade wars with the United States, then exporting the goods under a seemingly neutral label - switching, for example, “Made in China” to “Made in Cambodia.”
As reported by the Wall Street Journal, the Trump administration aims to “use negotiations with more than 70 countries to ask them not to allow China to ship goods through their nations, prevent Chinese companies from relocating to avoid tariffs, and reject low-cost Chinese industrial products in their economies.”
In recent years, Cambodia has attracted growing levels of Chinese investment, especially in sectors such as textiles, electronics, and manufacturing. This shift is largely due to low labor costs, tax incentives, and a strategic geographic location. According to estimates by the think tank PressXpress, around 49% of Cambodia’s imports come from China, making it the country's most significant trading partner. These imports—mainly raw materials - feed the garment industry, which alone accounts for over 55% of Cambodia’s total exports.
U.S. authorities, however, have identified this commercial triangulation as a direct threat to Washington’s protectionist policies. As a result, in addition to the general 49% tariff, targeted sanctions have also been introduced in the green energy sector. In April 2025, the U.S. Department of Commerce announced tariffs of up to 3,500% on solar panels imported from Cambodia, Vietnam, Malaysia, and Thailand. The dramatic decision was based on claims that many producers had failed to cooperate with investigations into Chinese component transshipment.
For Cambodia, these measures represent a serious blow. The country’s heavy reliance on Chinese raw materials and its dependence on exports to the U.S. create a delicate economic balance. Cambodia’s developing economy critically depends on Western markets, and the United States is one of the main destinations for its textile and electronics exports. The rising tariffs not only make Cambodian products less competitive but also directly threaten jobs in key sectors.
The Cambodian government now faces a delicate diplomatic balancing act. Prime Minister Hun Manet stated:
“Cambodia wishes to maintain an equidistant foreign policy. We preserve good relations with all countries based on mutual respect for independence, sovereignty, and common interests... This is the official position of the Royal Government of Cambodia. We are aligned with no country in particular.”
However, geopolitical dynamics suggest otherwise, pointing to an increasing dependence on China. During President Xi Jinping’s visit to Phnom Penh in April 2025, China confirmed its financial backing for the ambitious Funan Techo Canal, a $1.2 billion infrastructure project linking the Mekong River to the Gulf of Thailand. The aim is to boost domestic transport, facilitate exports, and reduce reliance on overland routes through Vietnam.
This is far from an isolated case. Cambodia is one of the Southeast Asian countries most deeply involved in China’s Belt and Road Initiative (BRI)—a massive infrastructure and economic development plan launched under President Xi Jinping. The BRI seeks to build a vast network of land and sea trade routes linking China with Asia, Europe, and beyond, effectively reviving the ancient Silk Road. To achieve this, the initiative includes major investments in railways, ports, and energy infrastructure across participating countries -enhancing trade flows and expanding China’s economic and political influence. In Cambodia, Beijing has invested billions over the past decade in roads, railways, dams, and ports. While this support has driven development, it also raises concerns about growing Chinese dominance in the country’s internal affairs.
For now, Cambodia is trying to buy time. The Minister of Commerce has opened talks with the United States, seeking partial exemptions or relief from the tariffs by improving customs procedures and strengthening origin-tracing measures. Yet without a clear strategic repositioning, the country risks remaining trapped in a conflict it did not seek—one that could ultimately determine its economic future. Cambodia’s case is a stark reminder of how great-power rivalries have real, lasting consequences for smaller nations, often forced to choose between diverging interests in order to safeguard their stability.
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