The unintended consequences of US tariffs will be wide ranging, but few would have thought Trump’s America First trade policy would exacerbate illegal logging in Cambodia.
Cambodia is experiencing one of the fastest deforestation rates in the world. The country has lost 34 per cent of its primary forest cover since 2001. Most of the deforestation is related to conversion of forest into permanent, productive agricultural land – rubber plantations being the dominant form of activity.
However, logging, and in particular illegal logging, has also contributed to the problem, especially to the loss of tree cover in protected areas that are meant to preserve important biodiversity, including rare and endangered species.
Illegal logging has plagued Cambodia for almost five decades.
Now Trump’s tariffs might kill the main market for legal timber exports: the United States.
Illegal logging has plagued Cambodia for almost five decades. The low point was 1997 when estimates suggest 95 per cent of logging was done illegally. There have since been incremental improvements. Cambodia first experimented with export bans on unprocessed timber in 2006 to try and stem rampant logging by local companies. The effectiveness of this policy was muted, with illegal logging continuing even as export avenues were cut off. Between 2001 and 2024, more than one million hectares of tree cover was lost in supposedly “protected areas”. A 2021 report stated that 54 active logging areas were identified inside just one wildlife sanctuary.
Domestic conditions are not the only difficulty. A 2014 ban on logging native forests in Vietnam accelerated illicit forestry activity in its neighbours, Cambodia and Laos. The promotion of a wood processing sector in Vietnam while shutting down domestic logging created strong import demand for timber. For Cambodia, this spurred a cross-border black market trade, which involved widespread bribing of local border officials and a legalised import quota system in Vietnam for Cambodian logs. Reported exports to Vietnam were negligible while Vietnam's reported imports peaked at more than $350 million in 2015.
Those imports have since collapsed, but evidence suggests this does not mean the illegal trade has ceased. Satellite imagery from April 2023 shows illegal logging activities are continuing unabated in Cambodia’s protected areas. There is also extensive documented evidence of unsanctioned forestry activities by multiple Cambodian logging companies, some of which are politically connected. Illegal exports are continuing, including to Vietnam, with little response from authorities.
US tariffs could bolster this illicit industry.
Cambodia’s current reciprocal tariff is already one of the highest in Southeast Asia, at 36 per cent. Even if trade negotiations between Phnom Penh and Washington are successful, the tariff rate likely won’t be lower than Vietnam’s 20 per cent. There also remains a high risk that sectoral tariffs in addition to reciprocal tariffs will be imposed. One sector in Trump’s sights is timber and lumber. A tariff rate of 50 per cent is plausible, having already been imposed on steel, aluminium and copper.
Cracking down on illegal logging as US market access is lost would also risk a severe downturn in the industry.
Cambodia’s forestry industry is almost completely reliant on the US market for legal exports of processed timber and other derivative wood products. Tariffs at this level apply to 97 per cent of the export market.
As the US market closes off, heightened export competition from other foreign producers will give Cambodian loggers few options. The European Union’s deforestation regulation aims to limit imports that contribute to forest degradation. China already sources timber and lumber from Russia and elsewhere and imports processed wood products from Vietnam (some likely manufactured with Cambodian logs). Trade diversion to other markets will be limited.
The Cambodian government will appropriately be focused on other more important sectors such as textiles, and the broader economic headwinds that US tariffs create. Cambodian wood product exports to the United States only represent 1.4 per cent of total exports. Absent external financial and technical assistance, capacity and incentive to more strictly enforce forestry regulations or clamp down on chronic corruption will be close to non-existent. Cracking down on illegal logging as US market access is lost would also risk a severe downturn in the industry. Besides, ignoring illegal forestry activities would provide implicit government support in uncertain times.
Sectoral tariffs will also hurt the Vietnamese wood products sector, which sends 14 per cent of exports to the United States. Whether this is enough to reduce demand for Cambodia’s illegal log exports is hard to tell. Cambodian loggers might just export more to Vietnam at lower prices to capture reduced demand and earn what revenue they can. Illegal logging could conceivably become more intensive.
The country’s already high levels of deforestation coupled with US tariffs have the potential to exacerbate environmental damage in Cambodia and provide further fuel to well-established illegal logging operations. Cambodia’s government will understandably be preoccupied buoying the economy and more critical sectors. This is just one more example of how US tariffs will be harmful.
