Avoid Trump’s tariffs, some Chinese companies relocated to Cambodia’s “special economic zones”

Phnom Penh, Cambodia – When our CBS news team was in Phnom Penh, Cambodia’s capital, for about two hours, a semi truck passed by. A moment later we were welcomed by a huge arch with signage in two languages ​​- local Khmer, below Chinese.

There may be no mistakes about who is responsible for the “special economic zones” that rise from the soil. We approached the furniture factory and the Chinese manager invited us to shoot some videos.

The production facilities that produced the Ottoman Empire moved from China to Cambodia about a month ago.

We asked the manager about his neighbors in the economic zone and he said most of the companies he moved into were Chinese. The driving force behind relocating those manufacturing businesses is that we avoid tariffs on Chinese goods and there are many companies that choose to invest.

The scale of industrial parks growing in southern Cambodia is difficult to understand. The building lasted for miles.

The United States-China trade war is the main reason for investment in relatively small countries about 600 miles from mainland China.

In 2016, Cambodia’s exports to the United States were worth about $3 billion before President Trump’s first term. Last year, they exceeded $13 billion, accounting for nearly 30% of the country’s GDP.

The Cambodian government said more than half of the country’s factories are now in China, with a total value of about $9 billion.

Casey Barnett, president of the American Chamber of Commerce in Cambodia, told CBS News: “This is a means to avoid U.S. tariffs.”

While Chinese companies operating in Cambodia are announcing U.S. tariffs, they are technically following the rules. But Cambodia is worried that the country’s own economy can sustain collateral damage as the Trump administration puts China firmly on its economic crosshairs.

“They depend entirely on exports to the United States and could be targeted – a vulnerable target,” Barnett said.

For Mr. Huang, the owner of the clothing factory, this would be devastating. He easily acknowledges the prospect of President Trump targeting new tariffs with his Chinese (but made in Cambodia).

No newcomer opened shops in Cambodia 20 years ago, taking advantage of tax cuts and lower wages while still operating factories in China. But when the trade war began in 2018, he moved all his business to Cambodia.

He told CBS News that 60% of his business is in the U.S. market and his merchandise will be used for familiar retailers including Walmart and Costco.

Huang said the new order has been multiplied by the new order since Mr. Trump announced new tariffs on China, and the latest round of the order could take effect on Tuesday.

An escalating US-China trade war

Mr. Trump imposes 10% blanket Tariffs on Chinese imports In early February, by Import our China at 15% Coal and liquid natural gas, as well as crude oil, agricultural machinery and some cars, 10% tariffs. All imports that Mr Trump effective on Tuesday will be taxed by another 10% last week

He said Mr. Trump imposed tariffs on China as Beijing failed to stop deadly fentanyl from flowing into the United States

Beijing is already planning more countermeasures.

“China is studying and developing relevant countermeasures to deal with the threat of the U.S. to impose 10% tariffs on Chinese products under the pretext of fentanyl,” the Global Times newspaper quoted anonymous information on Monday, citing remarks that ruled the Communist Party on Monday.

“Countermeasures may include tariffs and a range of non-tariff measures, and U.S. agriculture and food are likely to be listed,” the report said.

CBS News has contacted the White House for comment and will be updated with any response.

Unless and until the escalating trade war turns Mr. Trump’s tariff economic weapon against Cambodia into a preferred economic weapon.

“Of course,” the businessman said. “A lot of people told me they need to build factories and they need to move immediately because they think taxes are increasing.”

He believes that the trade war will surely escalate, and he firmly believes that Cambodia and other Southeast Asian countries are the future of Chinese manufacturers.