Cambodia’s textile sector is coming under pressure from three directions at once: higher United States tariffs, rising fuel costs, and shipping disruptions linked to the war involving Iran. Together, these forces threaten one of Cambodia’s most important export industries, which depends heavily on thin margins, imported inputs, and reliable access to foreign markets.
Tariffs are squeezing exports
The biggest immediate blow is the United States tariff regime. Reports say Washington imposed a 36 percent tariff on Cambodian exports in 2025, with transshipped goods facing an even higher rate, badly hurting garments, footwear, and travel goods. That matters because the United States remains a major buyer of Cambodian textile products, and higher tariffs make those goods far less competitive against rivals such as Vietnam and Bangladesh. In practical terms, the result is weaker demand, lower order volumes, and pressure on factories to cut costs.
Fuel costs raise production pressure
At the same time, Cambodia is being hit by higher oil prices. Textile production depends on transport, electricity, and imported chemical inputs, so any energy shock quickly feeds into factory costs. Cambodian garment workers have already been warned that rising fuel prices are increasing the strain on their livelihoods, and authorities have responded with temporary transport support to soften the impact. For factories, however, this is only a partial relief, because the real problem is that higher fuel costs reduce margins in a sector that already competes on low price rather than high value.
Shipping disruption is the hidden risk
The third pressure point is shipping disruption linked to the war with Iran. Freight markets have become more volatile as tension around the Strait of Hormuz affects global tanker traffic and raises the cost of moving goods. For Cambodia, that is especially serious because the textile sector relies on imported raw materials and must move finished goods through long supply chains. Even when the country itself is not directly involved in the conflict, delayed vessels, higher insurance premiums, and container shortages can still disrupt delivery schedules and erode buyer confidence.
Why this matters for Cambodia
The wider danger is structural. Cambodia’s textile and garment sector employs hundreds of thousands of workers and accounts for a major share of export earnings, so shocks to this industry can quickly become a national economic problem. If tariffs remain high while energy and freight costs continue climbing, factories may cut shifts, reduce benefits, or shift workers onto more precarious contracts. That would not only hurt workers but also weaken Cambodia’s place in global supply chains. In short, Cambodia’s textile sector is being squeezed by trade policy from the United States, by global energy inflation, and by shipping instability linked to the Iran conflict. Each pressure is serious on its own; together, they create a highly fragile outlook for one of the country’s most important industries.