Overall US tariff burden to stay below 19%, Chanthol says

Deputy Prime Minister and First Vice-Chairman of the Council for the Development of Cambodia Sun Chanthol (centre) addresses a press conference in Phnom Penh yesterday. KT/Chor Sokunthea

Synopsis: In an effort to reassure manufacturing stakeholders and foreign investors, Chanthol confirms that the latest tariff adjustments will not be stacked onto the existing reciprocal rate.

Deputy Prime Minister and First Vice-Chairman of the Council for the Development of Cambodia Sun Chanthol yesterday said that Cambodia’s exports to the US will not face an overall tariff burden exceeding 19 percent, as the Royal Government works with Washington to maintain the Kingdom’s trade competitiveness.

Addressing a press conference on “The New Tariff Rates on Imports from Cambodia to the United States Following the Section 301 Trade Act Compliance Investigation”, in Phnom Penh, Chanthol highlighted that Cambodia, Malaysia and Indonesia are the only three ASEAN countries that have signed an Agreement on Reciprocal Trade (ART) with the US. “However, on February 24, the US Supreme Court removed the reciprocal tariff imposed by President Donald Trump,” he said.

He noted that, under Section 122 of the Trade Act of 1974, the Trump administration had imposed temporary tariffs of 10 percent on imports globally for a maximum period of 150 days, which expired on July 24 and were replaced by measures under Section 301.

The Deputy Prime Minister explained that under Section 301, the United States Trade Representative (USTR) conducted investigations into two major areas: forced labour and excess capacity.

“On July 23, USTR imposed a 10 percent tariff on Cambodia,” he said, adding that only the three ASEAN countries that signed ART received this rate, while other countries were subject to a 12.5 percent tariff.

Chanthol emphasised that the new tariff does not add to the previous 19 percent reciprocal tariff imposed last year. “The new 10 percent tariff means Cambodia will pay the Most-Favoured-Nation (MFN) tariff approved by the US Parliament, not the US government,” he said.

He further noted that one more Section 301 investigation remains ongoing on excess capacity involving 16 countries, including Cambodia, Indonesia, Malaysia, Vietnam, Thailand and China, with the USTR expected to release its final decision in the coming months.

Regarding the potential tariff impact from the excess capacity investigation, Chanthol said that he had discussed the matter with the US side through an online meeting to ensure that the combined impact of the forced-labour and excess capacity tariffs would not exceed the 19 percent rate agreed under the ART between the two countries.

“The US side promised that they will not allow Cambodia to lose its trade competitiveness in the region,” the Deputy Prime Minister added.
-Khmer Times-