Logo of Phnom Penh Post newspaper Phnom Penh Post - Trade war may boost Kingdom’s US exports

Trade war may boost Kingdom’s US exports

Content image - Phnom Penh Post
An attendant rearranges suitcases and bags earlier this year at a shop in central Phnom Penh. Hong Menea

Trade war may boost Kingdom’s US exports

Exports of travel goods from the Kingdom are set to gain from the ongoing US-China trade war as US lobbyists for the Garment Manufacturers Association of Cambodia (GMAC) claim that President Donald Trump plans to raise duties on such China-made products from 10 to 25 per cent in the fourth quarter.

GMAC deputy secretary-general Kaing Monika said its lobbyists in Washington, DC, had indicated as such and that the increased duties on China-made travel goods would mean orders would be shifted out to countries like Cambodia.

He said China still exports almost $5 billion worth of travel goods to the US.

“Travel goods production should continue to exit China and be a growth opportunity for Cambodia,” Monika said.

President Donald Trump recently threatened to raise levies on $200 billion worth of Chinese goods from 10 to 25 per cent. The list of affected products includes handbags, travel items and other accessories.

The Office of the US Trade Representative is due to make a final decision on the issue at the beginning of next month.

Shanghai-based China Market Research Group (CMR) analyst Jason Lee told The Post that the trade war will hurt the US and China, possibly increasing unemployment rates and commodity prices in many sectors.

However, he said it might benefit export countries such as Cambodia. “If the [increased] duties are really enforced, travel good manufacturers in Cambodia can take advantage of it and attract more capital to invest in product upgrades and product variety.

“I expect orders from the US to increase, but not substantially as Trump intends to ‘overhaul’ the US’ travel goods market and create more domestic job opportunities in the sector,” he said.

In July 2016, 28 different lines produced in the Kingdom became eligible for duty-free status. Since then, the sector for travel goods has seen huge growth potential.

While the export of travel goods like suitcases and handbags from Cambodia to the US was valued at about $50 million per annum before 2016, GMAC figures revealed that the export volume jumped to $160 million in the first half of this year.

The latest trade data from the US government said goods from Cambodia brought in between January and June totalled $1.72 billion – representing a 26 per cent growth over last year.

However, there is increasing worry over Cambodia’s economic cooperation with the US, as political tensions have been on the rise over the last one year.

There is a concern that Cambodian exports to the US could take a hit if any preferential arrangements are reviewed.

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