Prime Minister Hun Sen expressed concern on Tuesday that an impending global trade war could impact the Cambodian economy, suggesting that economists and experts study what preparations should be made to avoid any negative effects.
Pointing out that such a trade war could threaten the global order, the prime minister warned that its impacts would be felt throughout the Kingdom.
“The current situation we are facing now is that the global trade war is definitely happening. So the issue is: how will it impact us and the region? Our academics and experts need to conduct studies on the issue for us to respond correctly because it is not a small matter. It is a lose-lose situation,” he said.
US President Donald Trump escalated a growing trade war with China by unveiling plans on Monday to impose 10 percent tariffs on an additional $200 billion worth of Chinese goods.
With the world’s two largest economies already engaged in a confrontation long dreaded by markets and industry, Trump said he was pushing forward with fresh punitive measures over Beijing’s “unacceptable” move to raise its own tariffs.
The US already imposes 25 percent tariffs on $50 billion worth of Chinese imports. However, in response, China unveiled 25 percent duties on $50 billion in US imports in a tit-for-tat measure.
European Union (EU) countries on Thursday approved a raft of tariffs targeting US goods, including whiskey and motorcycles, in retaliation against painful duties imposed by Trump on European metals.
The Post previously reported that Cambodia is already facing the issue over whether the EU is considering possible sanctions against the government over its crackdown on political opposition, including a possible rollback of the Everything But Arms (EBA) preferential trade agreement.
Cambodia’s economy has long relied on the garment sector, which employed 847,419 workers last year.
It generated $7.6 billion last year and grew by four percent, which would mark a slowdown in the growth rate compared to previous years, according to report from the Ministry of Labour.
The EU and the US are the main markets where garments and textiles from Cambodia’s factories end up, while China is seen as the country’s main market for agricultural products.
Centre for Policy Studies Director Chan Sophal said that a comprehensive study on the impact of the US-China trade war should be conducted.
“I agree it’s very important to undertake a comprehensive study on the potential impact of the US-China trade war if it happens,” he said.
Sophal said the country could potentially leverage on the crisis to sell more agricultural products to China and buy cheaper steel from there.
“However, the second-wave effect of the resulting economic slowdown in both China and the US could lower demand for consumption of Cambodian products, and possible investment in the Kingdom, except in agriculture and agro-processing,” Sophal said.