As China and the US recently faced off in diplomatic talks, Cambodians may wonder where the kingdom sits in relation to its two global big brothers? Cambodia has made trade deals with both superpowers in recent years, so VOD takes a closer look at what was agreed, and what it means for business. Crucially VOD asks: has the Cambodian government promised more than it can deliver?
As if we needed reminding, the middle east conflict taught us that oil really does make the world go round, lubricating global trade and transport. Now we are at the beginning of a potentially damaging economic slump, as oil and gas supplies dry-up and sectors crucial for Cambodia’s economy are affected, such as agriculture and tourism.
So, what is the best path forward in such uncertain times? Is there a strategic course to be steered between old and future economies that ensures future prosperity? How should Cambodia position itself, as surrounding superpowers vie for regional control and influence? These are not easy questions to answer, let alone to navigate a course of implementation. While we cannot know the future, we can lay out with clarity the current situation. So let us first examine – What we do know.
Cambodia has in recent years swung from having a close trade affair with China, with mixed results, back into the arms of the US, with a new trade deal signed last year.
With the Thai’s grabbing land at the border, the thawing of relations with the US could appear a desperate bid to get help in resolving the border conflict. Indeed, the Prime Minister, Hun Manet heaped praise upon Donald Trump when he arrived in Malaysia and brokered a peace deal in October 2025. Manet praised Trump’s “extraordinary statesmanship,” having earlier nominated him for the Nobel Peace Prize. Then in January, Cambodia joined countries as a founder member of Trump’s newly formed ‘Board of Peace.’
While these diplomatic moves are well documented and politicians have been quick to highlight the handshakes and the signatures, little has been examined about what Cambodia gave to Trump in return for his role in Malaysia. Afterall, ‘The Art of the Deal’ requires some give, and mostly take.
Cambodia (and Malaysia) signed a comprehensive trade deal with the US, during the October 2025 Kuala Lumpur meeting. The ‘Agreement on Reciprocal Trade,’ spells out in great detail, how Cambodia must behave in trading-relations with the US. It specifies ways in which US companies must be treated. So, what is behind this rigorous set of conditions, and do they matter?
The US is currently engaged in a technological war with China, as each country tries to achieve global supremacy in Artificial Intelligence – set to reshape our world. This race to technological supremacy will require enormous quantities of resources to succeed. Energy is needed to power vast data centres. Control of minerals including valuable rare earths, is vital to create faster computers. Specialised expertise among working populations is required to manage complex societal upheaval as work patterns change.
If the US Trade deal is a comprehensive commitment by Cambodia, that it will not pursue trade arrangements with China, then what about The China–Cambodia Free Trade Agreement (CCFTA) which entered into force on 1 January 2022? It was Cambodia’s first bilateral Free Trade Agreement (FTA) closely linked to the Belt and Road Initiative and makes explicit trade commitments to China.
The main provision is an extensive reciprocal reduction of tariffs, which is especially generous towards Cambodian farmers and food exporters. Other clauses deal with: services, digital and strategic investment, and not least Chinese financing of infrastructure and industry. Above all, the agreement stresses economic cooperation on everything from e-commerce to closer linking of supply chains to China’s economy.
Having signed up to trade deals with two competing superpowers, is Cambodia now being pulled in two directions at once? Indeed, can Cambodia comply with the terms of both trade deals, or are they contradictory? If we take a closer look at what the US TRA is demanding, we reveal some promises that the Cambodian government might struggle to fulfil.
The US trade agreement is very forceful and prescriptive in its language, listing for every detail of trade, what Cambodia: “Shall” and “Shall not” do. Much of it requiring alteration of domestic laws and regulations.
Here the US tech billionaires may have intervened in setting the agenda: “Cambodia shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies…,” it states. This would include, for example, prohibiting The Cambodian government from taxing Facebook to operate in the country.
The following clause is a more direct challenge to Cambodia’s existing agreement with China, “Cambodia shall consult with the United States before entering into a new digital trade agreement with another country that jeopardizes essential U.S. interests.”
The TRA dictates how Cambodia is to behave and insists that it join US tech companies in avoiding taxes globally: “Cambodia… shall immediately and unconditionally support multilateral adoption of a permanent moratorium on customs duties on electronic transmissions at the WTO (World Trade Organisation)”.
Several points are specifically designed to prevent Chinese products being shipped to Cambodia and then re-exported to the US, thus avoiding high US tariffs on China and securing cheaper prices.
Both China and the US have their eyes on Cambodian mineral wealth, with both countries having high expectations, highlighting another point of tension. The reality is that Chinese companies are already operating in the sector, but the US is keen Cambodia provides the necessary access to its companies in future. The US deal stipulates that, “Cambodia shall allow and facilitate US investment in its territory to explore, mine, extract, refine, process, transport, distribute, and export critical minerals and energy resources.”
The agreement goes on to stress that terms for US companies must be the same as for Cambodia’s domestic investors. This is extended to Cambodia’s State-owned Enterprises, which under the terms, are not allowed to be given preferential treatment, on anything including subsidies or price, over US companies. For example, Cambodia is no longer allowed to supply essential services like tap water, if US companies wanting to invest, can do so more cheaply.
The US insists that it’s regulatory standards, such as Intellectual Property and Trademarks are accepted and protected. It also requires that Cambodia enforces US trade sanctions against other countries, and this can include China. For example, on 1 May, the US sanctioned China’s Haiye Oil Terminal for importing large quantities of oil from Iran. Oil that under the terms of the US TRA, Cambodia would be obliged to reject if China offered to supply it.
Cambodia is trying to benefit simultaneously from both Chinese economic integration and US market access. However, the 2025 US agreement appears drafted specifically to limit the strategic advantages China could gain through Cambodia. China’s reaction, though subtle so far, could cause problems, not least withdrawal of support in times of need, for items like liquified gas and fertilizer. The US TRA was signed under pressure to halt the border fighting. It appears that much was given away to the US at the 2025 Kuala Lumpur meeting in the process, as a dividend for peace. Troubling is the absence of information about it, let alone a national Khmer conversation about these far-reaching new terms of trade. Not least, how these have, and could, impact trade relations with China.
