Cambodia Eyes Duty‑Free US Garment Access Through Cotton Quota Deal Despite New Tariffs

PHNOM PENH, July 24, 2026 (KPT) – Cambodia is negotiating a preferential trade arrangement with the United States that could allow garments made with US cotton and textile inputs to enter the American market quota‑free and duty‑free, offering manufacturers a potential boost despite newly announced tariffs, officials said Thursday.

Commerce Minister Cham Nimul said Cambodia is among four countries – alongside Bangladesh, Indonesia and Malaysia – discussing a tariff‑rate quota system with Washington that would encourage the use of US‑origin cotton while supporting apparel exports back to the United States.

The talks follow the Office of the US Trade Representative’s decision to impose a 10 percent Section 301 tariff on imports from Cambodia, compared with a higher 12.5 percent rate on regional competitors Thailand and Vietnam. USTR said Cambodia qualified for the lower tariff after introducing measures to prohibit imports produced with forced labor.

“We are also on the negotiating path for a quota system with the United States,” Nimul told Bloomberg. “Specifically sourcing raw materials for garments from the United States, processing them in Cambodia and re‑importing them back into the United States quota‑free and duty‑free.”

She said the arrangement would strengthen the garment sector by broadening sourcing options and improving production efficiency. “Our vertical integration for garments is very responsive to the raw materials that come in. The more sourcing options we have, the better our ability to adapt, reduce production costs and remain competitive,” she said.

Nimul added that Cambodia has taken further steps to strengthen forced labor import controls, expressing confidence the country could maintain one of the region’s lowest tariff rates under the new US framework.

Beyond tariff discussions, she said both sides are working to modernize customs procedures, harmonize standards and streamline licensing requirements. “These are reforms that Cambodia already has on its own agenda as we prepare for graduation from Least Developed Country status in 2029,” she said.

Minister says the proposed cotton‑based quota mechanism could encourage manufacturers to diversify raw material sourcing while reinforcing bilateral trade ties.