"Southeast Asia Reels as Trump’s Tariffs Escalate Tensions", 8 July 2025

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The July 2 agreement with Vietnam had injected cautious optimism into the region. That deal lowered tariffs on Vietnamese exports to 20 percent—down from a previously announced 46 percent—while setting a 40 percent tariff on transshipped goods. In exchange, the U.S. will gain zero-tariff access to Vietnamese markets.,,

At a press conference...Cambodian Deputy Prime Minister Sun Chanthol acknowledged that negotiations with the U.S. would continue. He highlighted one silver lining: the tariff had dropped from the 49 percent announced in April to 36 percent in Trump’s latest letter...

“Disappointed,” Ken Loo, Secretary General of the Textile, Apparel, Footwear and Travel Goods Association of Cambodia (TAFTAC), told Sourcing Journal summing up his reaction to the 36 percent tariff...

“Our relationship has been, unfortunately, far from reciprocal,” Trump wrote in his letter to Cambodian Prime Minister Hun Manet dated July 7. “Starting on August 1, 2025, we will charge Cambodia a tariff of only 36% on any and all Cambodian products sent into the United States, separate from all sectoral tariffs. Goods transshipped to evade a higher tariff will be subject to the higher tariff.”

Trump further stated that if Cambodia or its companies chose to build or manufacture products within the U.S., they would face no tariff at all...

He also warned that if Cambodia increased its own tariffs on U.S. goods, the U.S. would respond by adding an equal percentage to the existing 36 percent...

Cambodia, where the U.S. accounts for 39 percent of garment, footwear, and travel goods exports, is heavily reliant on preferential market access from both the U.S. and the European Union...

Trade expert Massimiliano Tropeano pointed out that Cambodia’s exclusion from any mention of transshipment provisions—as Vietnam was—is both confusing and potentially concerning...

He added that it remains uncertain whether garments made with Chinese raw materials would be classified as transshipments...

Manufacturers told Sourcing Journal that the uncertainty has disrupted planning, added costs, and forced brands to reconsider sourcing strategies—including possibly redirecting orders to competing countries.

A recent survey conducted by Better Factories Cambodia (BFC), the International Labour Organization (ILO), and the International Finance Corporation (IFC) [found] [n]early half of Cambodia’s garment, footwear, and travel goods factories reported that they were uncertain they could maintain operations beyond the next three months due to tariff uncertainty and declining buyer confidence.

More than a quarter of factories said buyers were pushing for price reductions; 15 percent reported having few or no orders on hand...

Factories exporting to the U.S. made up the bulk of respondents...

How long can factories sustain their business? Forty percent said they could sustain operations for one to three months; 8 percent said less than one month. With the sector already characterized by rapid turnaround times and flexible production schedules, even a slight decline in orders could trigger widespread layoffs and suspensions—reminiscent of the COVID-19 trade collapse, the survey found...

Japan and South Korea face blanket 25 percent duties, while Myanmar and Laos were hit with 40 percent, and Indonesia with 32 percent.

Indonesia’s government...is set to resume negotiations with U.S. trade envoys to reduce the 32 percent tariff...

Meanwhile, the tariff blow hit Thailand hard. The 36 percent figure was unchanged from April levels—despite Thailand submitting a new proposal to Washington on Sunday, pledging to cut its $46 billion trade surplus by 70 percent within five years...

Malaysia’s Ministry of Investment, Trade and Industry (MITI) said Tuesday it remained committed to ongoing engagement with the U.S. toward a “balanced, mutually beneficial, and comprehensive” trade agreement. Malaysia saw its proposed tariff increase slightly—from 24 to 25 percent...