United States and Cambodia finalize fresh trade agreement negotiations
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In a significant move aimed at strengthening economic ties, the United States has reached new tariff agreements with Thailand and Cambodia. These agreements, effective August 1, 2025, will see the previously threatened 36% tariff on goods entering the US from these countries reduced to a more manageable 19%.
The reduction in tariffs follows intensive discussions led by US Commerce Secretary Howard Lutnick, who facilitated the negotiations. The decision to lower the tariff rate was made after political and trade concessions from both Thailand and Cambodia, aligning the tariff rate with those given to neighboring Southeast Asian nations like Indonesia and the Philippines.
Thailand, in particular, made substantial concessions to the US in exchange for the tariff reduction. These include a near-total tariff exemption for over 10,000 US import items into Thailand, such as medical instruments, advanced automotive parts, and certain specialized foods. Additionally, Thailand has agreed to reduce non-tariff barriers by streamlining sanitary regulations, customs procedures, and certification processes for US products. The country will also implement a "post-clearance audit" system, allowing faster customs clearance.
Moreover, Thailand has opened its Eastern Economic Corridor (EEC) and infrastructure investment areas to US companies, offering fast-track services and investment incentives in clean energy, semiconductors/ICT, and logistics sectors.
Cambodia, too, negotiated for a tariff rate lower than its regional competitors. Prime Minister Hun Manet appealed for an "appropriate tariff rate" to support Cambodia’s economic recovery post-conflict. While specific tariff details beyond the 19% rate have not been publicly disclosed, Cambodia proposed measures such as improved market access for US goods and the purchase of Boeing aircraft as part of the deal.
Both countries rushed to negotiate these deals before the August 1 deadline, following President Trump's threat to end negotiations if military conflicts continued. The new trade deals were announced by US Secretary of Commerce Howard Lutnick and were reported by The New York Times on July 30, 2020.
It is worth noting that Vietnam faced tariffs of 20% as a result of previous trade negotiations. However, these new agreements with Thailand and Cambodia will secure lower tariffs for their products, potentially boosting their exports to the US.
In essence, these agreements represent a trade-off: both Thailand and Cambodia avoid the heavy 36% tariffs by making significant trade and market access concessions to the US, following the resolution of their regional conflict and leveraging diplomacy.
- The reduction in tariffs for Thailand and Cambodia, as part of the new trade deals, could stimulate investing in their economies, especially in sectors like healthcare, with the near-total tariff exemption for medical instruments.
- The finance industry might witness increased activity as a result of the agreements, with potential expansions in business for US companies in sectors like finance, clean energy, and logistics, as Thailand opens its Eastern Economic Corridor to investments.
- The new tariff agreements between the US, Thailand, and Cambodia could have indirect positive effects on the health of the global economy by promoting economic growth and stability in these countries, thereby contributing to global financial markets.
