PHNOM PENH – The current 19 percent tariff on Cambodia’s exports to the United States is expected to have minimal impact on the country in the coming years, according to the Asian Development Bank (ADB). However, the situation is fragile and sensitive.

In a policy brief published on November 11, ADB examines the potential economic and social effects of the tariffs on Cambodian exports next year and beyond, highlighting both the resilience and vulnerabilities of Cambodia’s export-driven economy.

Titled Economic Impacts of the United States Tariff on Cambodia, the brief was authored by Milan Thomas, ADB country economist for Cambodia, with support from the Cambodia Development Resource Institute. 

It models the effects of three possible tariff levels — low (10 percent), medium (19 percent) and high (36 percent) — on Cambodia’s growth, employment, poverty and government finances.

Thomas acknowledged that government and industry experts have been closely monitoring the situation for months.

“They anticipated that the high tariff proposed earlier this year would have imposed a significant economic burden, whereas the current 19 percent tariff does not,” Thomas said.

“Economic modelling demonstrates that the present tariff is manageable, while a higher rate would have serious consequences for Cambodian families, including increased unemployment and poverty.

The brief cautions that economic stability could be affected if tariffs increase further. A high tariff could reduce growth by nearly one percentage point, lead to more than 100,000 job losses, and increase poverty by more than one percentage point, reversing recent progress in poverty reduction. 

The effects would particularly impact workers in the garment and electronics sectors, who might be forced to shift to lower-paying jobs in agriculture or basic services.

The policy brief relies on economic modelling from Victoria University’s Center of Policy Studies and the most recent household survey data from Cambodia’s National Institute of Statistics.

If tariffs rise, it further suggests that temporary relief measures — such as social transfers, employment services and training programs — should be implemented to ease labor market transitions and protect vulnerable populations.

Over the longer term, investments in infrastructure, human capital and business reforms are believed to strengthen the country’s resilience to future economic shocks.

Established in 1966, the ADB is a leading multilateral development bank that promotes inclusive, resilient, and sustainable growth throughout Asia and the Pacific. 

ADB uses cutting-edge financial tools and strategic partnerships to improve lives, build high-quality infrastructure, and protect the environment, while collaborating with its members and partners to address complex regional challenges.