Cambodia, Vietnam, and Thailand hit hardest in ASEAN by US tariff impacts

UNDP report highlights the severe impact of US tariff changes, with Cambodia, Vietnam, and Thailand seeing significant export losses and economic strain.

A report by the United Nations Development Programme (UNDP) warns that recent changes in US tariff policy have had a significant impact on ASEAN economies, with total exports to the US projected to fall by as much as 9.7 %. The heaviest losses are expected for export-driven economies such as Cambodia, Vietnam and Thailand.

Cambodia most at risk

Cambodia is seen as the most vulnerable, with exports to the US forecast to contract by 23.9 %. The country relies on the US for around 58 % of its total exports and faces average tariff rates close to 19 %. In addition, Cambodia could come under scrutiny as a potential transhipment hub for goods seeking to bypass US duties.

Vietnam’s exports plunge, GDP hit

Vietnam is next in line, with exports to the US expected to decline by up to 19.2 %, according to the UNDP. Key sectors, including garments, footwear and electronics, now face average tariffs of roughly 20 %, and the US has accounted for 36.6 % of Vietnam’s overall export volume.

Philip Schellekens, UNDP’s chief economist for Asia-Pacific, told Reuters that in a worst-case scenario, a 20 % tariff hike triggering severe inflation in the US could slash Vietnam’s export earnings by as much as US$25 billion (around 790 billion baht) in a single year, nearly one-fifth of its annual total.

“No ASEAN country is harder hit by the US tariff hikes than Vietnam,” Schellekens said. “And in terms of absolute trade value, only China in East Asia suffers more.”

Vietnamese customs data already reflect the shift. Exports to the US in August slipped 2 % from July, with footwear, in which Vietnam is the world’s second-largest producer, plunging 5.5 %. Overall, the downturn in exports is expected to drag Vietnam’s GDP growth down by about 5 %.

Long-term effects and mitigation

The full impact may take years to materialise, though some effects could be cushioned by exporters absorbing part of the costs, diversifying to new markets, and boosting domestic consumption.

Still, the World Bank has revised down its forecast for Vietnam’s economic growth this year to 6.6 %, from 6.8 % earlier, following the introduction of US tariffs. That projection falls well below the government’s official target of 8.3–8.5 %.

Source: Nation Thailand