Market Data 
On April 2, 2025, U.S. President Donald Trump unveiled his new “Liberation Day” trade initiative, announcing a new wave of sweeping tariffs on U.S. imports. While most media attention focused on the 34% tariff on Chinese goods and 24% on Japanese products, the most shocking figure was largely overlooked: a 49% tariff on Cambodian imports—the highest among all countries.
What sets this tariff apart is not just its severity but the unorthodox methodology behind it. Rather than relying on standard economic or trade metrics, the Trump administration employed a simplistic and controversial formula, effectively weaponizing the U.S. trade deficit.
The Basis for Trump’s Tariff Formula
Trump’s method involves the following steps:
- Divide the U.S. trade deficit with a country by U.S. imports from that country.
- Multiply by 100 to get a percentage, which he labels the “effective foreign tariff”.
- Divide this figure by 2 to obtain the reciprocal U.S. tariff.
General Formula:
This approach ignores a multitude of variables such as consumer demand, value chains, investment flows, and comparative advantage. It instead frames trade deficits as deliberate barriers, justifying retaliation.
China (2024 Data)
- U.S. Trade Deficit: $295.4 billion
- U.S. Imports from China: $438.9 billion
Japan (2024 Data)
- U.S. Trade Deficit: $68.5 billion
- U.S. Imports from Japan: $148.2 billion
Cambodia (2024 Data) — The World’s Hardest Hit
Cambodia, a small and low-income country, became the most heavily penalized by Trump’s trade framework—despite being economically vulnerable and heavily reliant on low-cost exports like garments and furniture.
- U.S. Trade Deficit: $12.3 billion
- U.S. Imports from Cambodia: $12.7 billion
This extraordinarily high rate was derived from a rigid application of the same flawed formula used for much larger and wealthier trading partners.
Consequences and Concerns
The application of such a steep tariff on Cambodia highlights the dangers of using trade deficits as a policy tool. It treats an accounting imbalance as evidence of economic aggression—ignoring structural factors that contribute to trade flows, such as labor costs, currency regimes, or supply chain specialization.
Moreover, this move risks undermining Cambodia’s development trajectory, as it still recovers from the pandemic and attempts to diversify its economy. Many of its exports to the U.S. support factory jobs for women and rural workers. With no real ability to retaliate, Cambodia finds itself the biggest casualty of a trade war it did not start and cannot influence.
Conclusion
Trump’s 49% tariff on Cambodia represents the logical endpoint of a flawed economic doctrine. While framed as a matter of reciprocity, the methodology ignores trade realities and punishes countries purely based on numerical trade deficits—without regard to intent, development status, or economic structure.
Cambodia’s case is especially tragic: in a policy originally designed to challenge industrial superpowers like China and Japan, it is a small, developing nation that ends up paying the highest price.
[Photo by the White House, Public domain, via Wikimedia Commons]
The views and opinions expressed in this article are those of the author.
Sam Rainsy, Cambodia’s finance minister from 1993 to 1994, is the co-founder and acting leader of the opposition Cambodia National Rescue Party (CNRP).
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