Chinese Manufacturers Move to Cambodia to Dodge U.S. Tariffs

A fleet of trucks rolls through the Cambodian countryside, driving two hours south from the capital, Phnom Penh. Our CBS News team is led to a bustling economic zone identified by signs in both local Khmer and Chinese, clarifying the prominent Chinese presence.

We witness the transformation of this area first-hand at a recently relocated furniture factory from China. A manager there allowed us to capture the factory in action, benefiting from operations moved away from Chinese soil a month prior.

This factory is one of many, with numerous Chinese companies setting up shop in the area to escape the tariffs imposed by the United States on Chinese imports, fostering a significant capital shift.

This burgeoning industrial site spans several miles, signifying a rapid expansion catalyzed by the trade tensions between China and the U.S.

Statistics present a clear picture: before President Trump's tenure, in 2016, Cambodia exported around $3 billion annually to the U.S. That figure jumped to over $13 billion the previous year, accounting for almost a third of the nation's GDP.

Today, over fifty percent of Cambodia’s factories boast Chinese ownership, equating to approximately $9 billion in investments, illustrating the economic pivot as described by Casey Barnett, president of the American Chamber of Commerce in Cambodia.

While these Chinese firms legally operate within Cambodian borders, concerns mount over potential economic fallout on Cambodia should the U.S. extend tariff policies towards Cambodian exports.

Businessman Mr. Huang, with considerable U.S. market reliance, fears repercussions if President Trump targets Cambodia with similar tariffs as those levered at China.

Relocating his businesses to Cambodia two decades ago—originally drawn by attractive incentives—Huang transitioned fully in response to the trade war erupting in 2018.

His production, benefiting primarily from U.S. consumers through retailers like Walmart and Costco, has seen a spike in orders post-tariff announcements from President Trump.

Following the recent announcement of a 10% additional tariff on Chinese goods, escalated retaliatory strategies include China maintaining plans for countermeasures targeting U.S. agricultural products.

Until any shift in U.S. policy impacts Cambodia, more Chinese manufacturers may join Huang, seeking refuge from economic penalties in Southeast Asia.

He predicts a continued rise in demand for new factory spaces within Cambodia, driven by ongoing concerns about increasing U.S. tariffs.

With uncertainty looming, Huang and other manufacturers regard Cambodia and other regional neighbors as salvation for their business operations.

Anna Coren, an acclaimed correspondent, is positioned in Hong Kong, providing extensive Asia-Pacific coverage for CBS News.