Cambodia faces a significant diplomatic challenge as it strives to balance its trade relationships with both the United States and China. Recently, China issued a warning that countries should not strike trade deals with the US at the expense of Beijing, signaling potential tensions for Cambodia, which is about to begin tariff negotiations with the Trump administration. Cambodia was hit with a 49% tariff by the US, the highest imposed on any ASEAN nation, further complicating the situation.
Cambodia Faces Crucial Tariff Negotiations with the US
The 90-day pause declared by the US on April 9 sets the stage for crucial talks led by Deputy Prime Minister Sun Chanthol and Minister of Commerce Cham Nimul. The stakes are high as China, which has long been a significant trading partner of Cambodia, expressed strong opposition to any trade agreements that undermine its interests. “China will never accept deals made at its expense,” warned China’s Commerce Ministry.
Meanwhile, US Treasury Secretary Scott Bessent emphasized that nations negotiating with the US should align with Washington’s position on China, pushing for a coordinated stance among trading partners.
A Delicate Diplomatic Balancing Act
Vikas Reddy, an economist and international relations expert at Ohio University, highlighted the complexity of the situation, noting that Cambodia’s economic landscape is deeply intertwined with both powers. “China is Cambodia’s largest supplier of imports, while the US is its top export destination,” Reddy explained. In 2024, China became the largest source of foreign direct investment (FDI) in Cambodia, contributing nearly 50% of total investments. The country’s supply chains are also closely linked to China’s manufacturing ecosystem.
“This is an unprecedented challenge for Cambodia, and a delicate diplomatic balancing act is required,” Reddy added. Cambodia’s task will be navigating these negotiations without jeopardizing its relationship with either nation.
Leveraging ASEAN Frameworks to Strengthen Cambodia’s Position
Vichet Lor, Vice-President of the Cambodia Chinese Commerce Association, stressed the importance of Cambodia’s dual approach to negotiations. “The country should engage in both bilateral negotiations and leverage ASEAN’s multilateral framework to boost its negotiating power.”
China’s dominance in global trade has only increased since its accession to the World Trade Organization (WTO) in 2001, making it the largest trading partner for more than 60 countries. In contrast, the US remains the primary trading partner for just 33 nations. According to the Lowy Institute, 112 economies now trade more with China than the US, up from 92 in 2018.
Vichet pointed out that the US’s tariff measures are designed not only to revive domestic manufacturing but also to curb China’s rise in global trade. “This isn’t just a trade war,” he noted. “It’s also a currency war, with the US Dollar (USD) facing increasing competition from emerging alternatives as countries, including several ASEAN members, move towards BRICS and reduce their reliance on the dollar.”
The Path to Economic Resilience and Diversification
For Cambodia, the key challenge lies in negotiating better access to US markets without alienating China. The Kingdom’s current international trade ties are modest compared to larger ASEAN nations like Thailand, Vietnam, and Singapore, but both China and the US are essential for Cambodia’s long-term economic growth. As Cambodia aims for high-income status by 2050, managing its relationships with these global powers will be crucial.
“Balancing trade relations with both the US and China will fortify Cambodia’s economic resilience and pave the way for a more diversified, sustainable, and prosperous future,” Vichet concluded.
