US tariffs will help Cambodia's scam industry

By weakening Cambodia’s garment sector, tariffs would increase the national security threat that the scam industry poses to America.

KEY TAKEAWAYS

• The Scam Industry Is a Geopolitical Issue, Not Just a Criminal One. Cambodia’s cyberscamming industry is massive—worth potentially $12.5 billion a year—and now seen as a serious national security threat by the US, on par with drug trafficking. While some in Washington cast it as a China-directed economic attack, the reality is murkier: Chinese authorities also want it shut down, as Chinese citizens are major victims, too.

• China Is Walking a Diplomatic Tightrope with Cambodia. Despite its desire to curb the scam industry, Beijing is soft on Phnom Penh—unlike its tough approach to Myanmar and Thailand. Why? Because powerful Cambodian elites are allegedly benefiting from the scams. China fears that cracking down too hard might destabilize an “ironclad” ally whose economy and political structure are already fragile.

• US Tariffs Could Backfire, Boosting the Scam Industry. Tariffs on Cambodia’s garment exports—one-third of GDP and employing over a million people—would devastate the economy. With no viable alternative industries and rising debt levels, laid-off workers might turn to scam compounds for income, inadvertently strengthening the very threat the US wants to eliminate.

  ---

Chinese President Xi Jinping arrived in Phnom Penh yesterday for his first visit since 2016, which I’ll cover in more depth next week. One topic that Xi will almost certainly raise, though not publicly, is Cambodia’s scam industry, an issue on which the US and China should actually agree.