Cambodia Investment Review
As geopolitical competition intensifies and protectionist trade measures rise, Edwin Vanderbruggen, Senior Partner at Andersen in Cambodia, is urging the Kingdom to rethink its trade posture and economic priorities. In his latest presentation titled “Global Trade Tensions: Are You Tariff Ready?”, delivered on April 24, 2025, Vanderbruggen dissected the legal, economic, and policy implications of escalating tariff regimes, with a sharp focus on what Cambodia and its business community must do to stay competitive.
His central message was clear: trade liberalization is on the decline, and Cambodia must rapidly modernize its trade compliance systems, diversify its export markets, and prepare for a world where tariffs—whether rational or not—are the new norm.
The Tariff Threat: A 49% Warning Shot
One of the most striking takeaways from Vanderbruggen’s presentation was his calculation of the potential tariff that the United States could apply to Cambodian goods under a new “trade deficit adjustment” formula. Using 2024 data, Cambodia exported $12.6 billion worth of goods to the U.S. while importing just $322 million—a trade imbalance that, under the U.S. model, could justify a 49% tariff.
“This isn’t just theoretical,” he warned. “The U.S. has already moved in this direction, and Cambodia is extremely vulnerable given the growing reliance on the American market.” In fact, Cambodia’s export dependency on the U.S. has jumped from 21.4% in 2017 to 37.9% in 2024—an exposure that few other ASEAN economies share to this degree.
He dismissed the underlying logic of the U.S. methodology as flawed. “It’s the equivalent of calculating the square footage of your house by dividing your phone number by your dog’s age,” he said, quoting comedian John Oliver to highlight the absurdity of the math behind the tariff framework.
What the U.S. Wants—and How Cambodia Can Respond
Vanderbruggen listed several specific complaints from the U.S. government about Cambodia’s trade practices, most notably:
- HS classification disputes with the General Department of Customs and Excise (GDCE)
- A lack of transparency in government procurement
- Sales of counterfeit goods in tourist markets
- Regulatory concerns related to the National Internet Gateway
- Tax audits being perceived as barriers to investment
“These are not abstract problems,” he emphasized. “Many of them could be addressed quickly and at low cost.” For example, digitizing GDCE’s information services or targeting enforcement against counterfeit goods would be “quick wins” that could signal Cambodia’s willingness to engage constructively with U.S. concerns.
On a broader level, he warned that Cambodia’s existing trade incentives—such as income tax holidays, customs duty exemptions for SEZs, and property tax waivers—have already come under scrutiny by the U.S. Department of Commerce in solar panel subsidy investigations. While legal under domestic law, these incentives may now be viewed as countervailable subsidies by foreign partners.
Legal Options Are Limited—Multilateralism Is Key
While Cambodia could challenge the legality of such tariffs under WTO rules, Vanderbruggen noted that the WTO’s dispute settlement system has been dysfunctional since the U.S. blocked new Appellate Body appointments. “You can file a case and get a favorable ruling—but if the U.S. appeals, it just goes into a legal void,” he said.
Read More: US Tariffs – Cambodia’s Path To Resilience
However, he encouraged Cambodia to consider joining the WTO’s Multi-Party Interim Appeal Arbitration Arrangement (MPIA), a workaround supported by the EU, China and others to maintain dispute resolution procedures.
“Cambodia should not go it alone. Leverage ASEAN. Use the WTO. A small country has more rights in a rules-based system than in bilateral fights,” he said.
For Companies: Adapt, Diversify, and Understand Your Risk Profile
Vanderbruggen also laid out a concrete action plan for businesses in Cambodia that export to the U.S. or rely on global supply chains:
- Market Diversification
“Relying too heavily on one export market is dangerous,” he said. Companies should actively pursue opportunities in the EU, ASEAN, Japan, and Korea. This aligns with Cambodia’s rapidly expanding FTA network, which now includes bilateral agreements with China, Korea, and the UAE, and participation in RCEP. - Subsidy Risk Assessment
Exporters should examine whether any tax incentives or government support they receive could be deemed subsidies under foreign laws. “Don’t assume a benefit is harmless just because it’s legal in Cambodia,” Vanderbruggen warned. - Anti-Dumping Readiness
Firms shifting exports from the U.S. to the EU or other markets should prepare for anti-dumping challenges, especially in industries like textiles, solar, and electrical components. Transparent pricing, arms-length transactions, and detailed cost records will be critical. - Mastering Rules of Origin
To benefit from preferential tariffs under FTAs, companies must ensure they meet origin criteria. “Transshipment doesn’t count. Real value addition matters,” he said, outlining how improper classifications or insufficient local content could disqualify products from tariff benefits. - Invest in Services and Branding
Cambodia’s long-term economic trajectory should not be limited to manufacturing. “The value is not in stitching shirts—it’s in designing, branding, and selling them,” he said. He cited the “4T” strategy—Trade, Technology, Training, and Targeting—as key to boosting Cambodia’s services sector, especially tourism, education, and digital services.
Policy Reform: Five Steps for Cambodia
In his closing slides, Vanderbruggen outlined five strategic steps Cambodia should take immediately:
- Deepen Trade Liberalization: Reduce tariffs on both imports and exports, eliminate excessive licenses and permits, and improve transparency for suppliers and investors.
- Strengthen Alliances: Leverage ASEAN, join the MPIA, and be an active voice in WTO reform efforts.
- Expand FTA Access: Prioritize FTAs with the EU, Canada, and the Eurasian Economic Union. Current trade dependence on a few partners exposes Cambodia to excessive risk.
- Supercharge Services: Tourism, hospitality, and education are sectors where Cambodia is in a position to strongly enhance. These offer better jobs and more stability than low-end manufacturing.
- Focus on Governance and Skills: Long-term improvements in public administration, legal transparency, education, and tax reform will determine the success of any economic strategy.
Final Word: Resilience Through Reform
For Cambodian policymakers and the private sector, Vanderbruggen’s presentation was both a warning and a roadmap. In a global environment defined by shifting alliances, weakened multilateral institutions, and unpredictable tariff regimes, Cambodia must take control of its trade future through reform, diversification, and smarter engagement.
“This is not about outsmarting the U.S.,” Vanderbruggen concluded. “It’s about making Cambodia a more resilient, fair, and globally competitive economy.”
As trade tensions escalate, Edwin Vanderbruggen’s Leader Talks session stands as a timely and pragmatic guide for companies and governments navigating the new era of economic uncertainty.
