Background

The garment, footwear, and travel goods (GFT) sector remains a cornerstone of Cambodia’s economy. In 2025, the sector comprised 1,810 firms and employed over 1.11 million workers, around 75 per cent of whom were women. It is the country’s largest source of foreign exchange, accounting for 51.8 per cent of total exports in 2025. The United States has been Cambodia’s main GFT export market, representing more than 38 per cent of GFT export revenue in 2024, followed by the European Union at nearly 28 per cent, with the remainder distributed across Japan, Canada, the United Kingdom, China, and ASEAN markets. In April 2025, the US announced “reciprocal tariffs” on imported goods, initially proposing a 49 per cent tariff on Cambodian exports. Following several rounds of negotiations, a final tariff framework was agreed in August 2025, setting the tariff rate at 19 per cent – lower than initially proposed, but still significant for a highly export-oriented sector.

The recent tariff adjustments underscore the importance of monitoring how global policy developments are reflected in factory-level conditions. Following the announcement of new US. tariffs, Better Factories Cambodia (BFC) launched a Factory Pulse Tracker Survey to document factories’ reported operational conditions during a period of heightened uncertainty. The first wave of this survey, conducted in late May2025, provided early insights into factory order books, operational sustainability, and buyer relations. To assess how reported conditions evolved as the tariff context stabilized, BFC conducted a second survey round in November 2025.

Key Findings

• Order commitments remain broadly stable, but uncertainty is increasing for some firms.
• Buyer relationships remain largely intact, though pricing pressure affects some exporters. Buyer discontinuation has eased, and new markets are being explored, but some factories face higher discount demands.
• Labour disruptions remain limited, but recruitment challenges are intensifying. Job terminations and grievances are contained, yet shortages of skilled sewing workers and high turnover continue to constrain operations despite the return of migrant workers from Thailand.
• Factory sentiment is improving despite ongoing adjustment pressures. Expectations have become more positive between survey rounds, suggesting growing confidence in factories’ ability to adapt amid demand and labour uncertainties.