USTR Probe Puts Cambodia’s Supply Chains Under New Compliance Pressure

Published on June 2, the United States Trade Representative (USTR) proposed an additional 10 percent duty rate on imports from Cambodia as part of a sweeping global trade investigation regarding forced labor import prohibitions. The Ministry of Commerce has neither accepted nor rejected the USTR’s probe but has pledged to cooperate to address such imports of goods.

Under Section 301, the USTR can investigate and penalize foreign trade practices deemed unfair or burdensome to U.S. commerce. In the Section 301 Investigation, the agency argued that forced-labor goods gain unfair cost advantages and undercut U.S. workers and businesses that follow labor standards; the USTR cited Cambodia in a cotton case study for failing to block forced-labor-linked semi-finished materials and finished garments from entering the United States.

Still, Cambodia’s lower proposed tariff offers a competitive advantage. At 10 percent, the duty remains below the 12.5 percent rate proposed for many other economies, including the Philippines, Singapore, Thailand, and Vietnam. This could strengthen Cambodia’s role in U.S.-bound supply chains, given the country’s comparative cost advantages and established export manufacturing base for secondary markets like textiles and digital services. For manufacturers and suppliers that have outsourced production to the country, the lower duty rate may provide a business advantage in comparison to other higher-taxed, regional production hubs.

Nevertheless, the USTR’s action still prompts private stakeholders to prepare for potential tariff implications, including stricter compliance and labor traceability requirements. Given that Cambodia continues to face 19 percent reciprocal tariffs, the investigation will likely push Cambodian state officials to tighten enforcement of labor and product compliance. As a result, companies will need to strengthen product due diligence, maintain more detailed documentation, including certificates of origin, and monitor their supply chains to comply with requirements and preserve market access.

The USTR will hold a hearing on the proposed action on July 7, 2026. Cambodia is expected to contest the proposal but has not confirmed whether a delegation will appear at the hearing.