The United States and Cambodia have struck a sweeping new trade deal that eliminates tariffs on all U.S. exports to Cambodia while addressing thorny issues from intellectual property to forced labor, officials announced following the agreement’s signing in Malaysia.
President Donald Trump and Cambodian Prime Minister Hun Manet formalized the Agreement on Reciprocal Trade during a ceremony in Kuala Lumpur on October 26, 2025, marking a significant shift in economic relations between the two nations amid growing competition for influence in Southeast Asia.
Zero Tariffs, Selective Reciprocity
Under the deal, Cambodia has committed to eliminate tariffs on 100 percent of American industrial goods and agricultural products — a provision it has already begun implementing. The United States, meanwhile, will maintain most of its existing tariffs on Cambodian goods at 19 percent, though certain products will receive zero-tariff treatment, according to the joint statement released by both governments.
“Cambodia commits to eliminate tariffs on 100 percent of U.S. industrial goods and U.S. food and agricultural products exported to Cambodia and has already implemented this commitment,” the White House noted in its release.
Beyond tariffs, the agreement tackles non-tariff barriers that have historically complicated trade between the two countries, including streamlining import licensing procedures, simplifying regulatory requirements, and recognizing U.S. sanitary and phytosanitary measures for food and agricultural products.
Labor Rights and Forced Labor
Perhaps most notably for human rights advocates, Cambodia has agreed to adopt and implement a prohibition on importing goods made wholly or partly by forced labor, as defined by International Labor Organization standards. The country has also committed to “engage with the United States to address issues related to labor rights that contribute to non-reciprocal trade,” according to documentation from trade officials.
Why does this matter? Labor practices have long been a sticking point in U.S.-Cambodian relations, with reports of worker exploitation in certain industries drawing international criticism.
The agreement represents a significant shift for Cambodia, which will now need to strengthen its labor oversight mechanisms to maintain favorable trade terms with the United States.
Intellectual Property and Digital Trade
Intellectual property protection — a persistent concern for U.S. businesses operating in Southeast Asia — features prominently in the deal. Cambodia has pledged to provide “a robust standard of protection” by ratifying international IP treaties and implementing effective enforcement mechanisms against infringement, particularly in the digital realm.
The digital components don’t stop there. Cambodia has also committed to facilitating digital trade by ensuring free data transfers across “trusted borders,” refraining from imposing discriminatory digital services taxes, and collaborating on cybersecurity challenges — provisions that reflect growing American concerns about digital protectionism in global markets.
Investment and Critical Minerals
In a nod to supply chain priorities, Cambodia will allow and facilitate U.S. investment in exploring and processing critical minerals and energy resources “on terms no less favorable than it accords to its own investors,” the agreement states.
The deal also includes provisions for Cambodia to facilitate “job-creating, greenfield investment in the United States” — a priority for the administration that has emphasized bringing manufacturing and investment back to American shores.
Trade Imbalance Persists
The agreement comes against a backdrop of a widening trade deficit between the two nations. U.S.-Cambodia goods and services trade totaled an estimated $13.5 billion in 2024, up 9 percent from the previous year. But that relationship remains heavily imbalanced, with the U.S. goods trade deficit reaching $12.3 billion in 2024 — a 9.3 percent increase over 2023.
Meanwhile, U.S. goods exports to Cambodia were a comparatively modest $319 million in 2024, up just 4 percent from the previous year. The U.S. services trade surplus with Cambodia also shrank dramatically, falling 90.4 percent to just $5 million in 2024.
These figures highlight the challenge ahead for U.S. negotiators: while Cambodia has agreed to eliminate tariffs, closing the massive trade gap will require more than just tariff adjustments.
Still, the agreement represents a significant step in normalizing economic relations between the two countries and potentially provides a template for similar deals with other Southeast Asian nations as the U.S. continues its strategic pivot toward the Indo-Pacific region.
As both nations move to implement the agreement, the true test will be whether Cambodia follows through on its commitments regarding labor practices, intellectual property protection, and market access — areas where promises have sometimes outpaced performance in the region.
