11 RI Facts: Trump’s Trade War Victims, Prabowo’s US Open Voices
- JAKARTA, Indonesia – The United States, under President Donald Trump, has announced new tariffs that could substantially impact Indonesia's economy.
- These tariffs are part of what Trump calls a "reciprocal" trade policy,targeting countries that impose high import duties on U.S.products.
- Economists predict the tariffs will directly affect Indonesian exports to the U.S.
Trump’s tariffs: Indonesia Faces Potential Economic Fallout
Table of Contents
JAKARTA, Indonesia – The United States, under President Donald Trump, has announced new tariffs that could substantially impact Indonesia’s economy. The declaration, made on April 2, 2025, included a specific tariff of 32% levied on Indonesian goods, in addition to a general 10% tariff.
These tariffs are part of what Trump calls a “reciprocal” trade policy,targeting countries that impose high import duties on U.S.products.
Impact on Indonesian Exports
Economists predict the tariffs will directly affect Indonesian exports to the U.S. Eisha maghfiruha Rachbini, an economist at Indef, stated that key sectors like textiles, footwear, electronics, furniture, palm oil, rubber, and fisheries could see a significant decline in exports.
“In theory, with the application of tariffs, there will be trade diversion from low-cost markets to high-cost markets,” Rachbini said. “So that it will have an impact on high costs for export actors for superior commodities and slowing production, and employment.”
rachbini urged the Indonesian government to immediately negotiate trade terms with the U.S. to minimize the damage. She also suggested optimizing existing trade agreements and seeking new partnerships with non-traditional markets.
Bhima Yudhistira, Executive Director of the Center for Economic and Law Studies (Celios), warned that industries ranging from electronics and automotive to clothing could be directly affected, potentially triggering an economic recession in Indonesia by the fourth quarter of 2025.
Business Community Responds
Shinta Widjaja Kamdani, Chairman of the Indonesian Employers Association (Apindo), anticipates reduced competitiveness for Indonesian products. “Of course this tariff increase will have an impact on the structure of production costs and competitiveness,” Kamdani said, noting that sectors heavily reliant on the U.S. market, such as textiles, footwear, furniture, electronics, coal, processed nickel, and agribusiness, will be particularly vulnerable.
Pahala Mansury, Deputy Chairperson of Trade and Foreign Affairs at the Indonesian Chamber of Commerce and Industry (Kadin), emphasized that Indonesia’s trade balance isn’t as large as other countries. He stressed the need for renegotiations to secure fairer trade rates for Indonesia.
“We hope that soon it can be re-negotiated, based on a review conducted by the National economic council (DEN), Indonesia’s tariffs are actually quite low,” Mansury stated.
U.S. Embassy Statement
The U.S. Embassy in Indonesia explained that the tariffs are aimed at achieving reciprocity, rebuilding the U.S. economy, and restoring national and economic security.
According to a fact sheet released by the embassy, President Trump declared a “national emergency” due to foreign trade practices.The U.S. argues that a large trade deficit weakens the country’s manufacturing base.
The embassy stated that the tariffs, authorized under the International Emergency Economic Powers act of 1977 (IEEPA), will remain in place until President Trump determines that the trade deficit and unfair trade practices have been addressed.
Indonesia’s Response
The administration of President Prabowo Subianto claims to have developed a strategy to mitigate the impact of the U.S. tariffs. Noudhy Valdryno,Deputy for dissemination and Information Media of the Presidential communication Office (PCO),outlined three key initiatives designed to ensure continued economic growth despite global disruptions.
These policies include:
- Diversifying Trading Partners: Indonesia’s participation in the BRICS Economic Alliance is intended to strengthen its position in international trade. Existing agreements like the Regional Comprehensive Economic Partnership (RCEP) and accessions to the Organisation for Economic Co-operation and Development (OECD) are also seen as crucial.
- Accelerating Downstreaming of Natural Resources: The government is prioritizing the downstream processing of natural resources,exemplified by the nickel industry. The Investment Management Agency is expected to further accelerate this process.
- Strengthening Domestic Consumption: Programs such as the free nutritional eating initiative and the establishment of Red and white Village cooperatives aim to boost domestic consumption and reduce reliance on imports.
Valdryno asserted that these measures demonstrate Indonesia’s resilience and ability to thrive despite global economic uncertainty.
Trump’s Tariffs: Indonesia Faces Potential Economic Fallout – A Q&A
In April 2025, the announcement of new tariffs by the United States under President Donald Trump sent ripples throughout the global economy, especially impacting Indonesia. Let’s delve into the details with a Q&A format.
| Question | Answer |
|---|---|
| What tariffs did the U.S. impose on Indonesia? | On April 2, 2025, the U.S. announced a 32% tariff on specific Indonesian goods, along with a general 10% tariff. |
| Why did the U.S. impose thes tariffs? | These tariffs are part of what President Trump called a “reciprocal” trade policy, targeting countries with high import duties on U.S. products. The U.S. Embassy in Indonesia explained that the tariffs aim to achieve reciprocity. Moreover, the U.S. argues that a large trade deficit weakens its manufacturing base and declared a “national emergency” due to foreign trade practices, according to a fact sheet released by the embassy. |
| What sectors in Indonesia are most at risk from these tariffs? | Economists predict significant declines in exports from sectors like textiles,footwear,electronics,furniture,palm oil,rubber,and fisheries. Shinta Widjaja Kamdani, Chairman of the Indonesian Employers Association (Apindo), noted that sectors heavily reliant on the U.S. market will be particularly vulnerable. |
| What impact will these tariffs have on indonesian exports? | Economists at Indef estimate the tariffs will directly affect Indonesian exports to the U.S. Eisha maghfiruha Rachbini, an economist at Indef, stated that these key sectors could see a significant decline in exports.A trade diversion from low-cost markets to high-cost markets could occur, impacting costs and potentially leading to slower production and employment, as Rachbini explained. |
| What are the potential economic consequences for Indonesia? | Bhima Yudhistira, Executive Director of the Center for Economic and Law Studies (Celios), warned that the tariffs could trigger an economic recession in Indonesia by the fourth quarter of 2025, directly affecting industries from electronics and automotive to clothing. |
| How is the Indonesian business community reacting? | Shinta Widjaja Kamdani of Apindo anticipates reduced competitiveness for Indonesian products,stating that the tariff increase will impact production costs and competitiveness. Pahala Mansury, deputy chairperson of the Indonesian Chamber of Commerce and Industry (Kadin), stressed the need for renegotiations to secure fairer trade rates for Indonesia. |
| What is Indonesia’s government doing in response to these tariffs? | The governance of President Prabowo Subianto claims to have a strategy to mitigate the impact. Noudhy Valdryno, from the Presidential Communication Office, outlined three key initiatives: |
| What dose the U.S. Embassy say about the tariffs’ duration? | The U.S.Embassy stated that the tariffs, authorized under the International Emergency Economic Powers Act of 1977 (IEEPA), will remain until President Trump determines that the trade deficit and unfair trade practices have been addressed. |
| What does Indonesia hope to achieve in response? | Pahala Mansury, Deputy Chairperson of Trade and Foreign Affairs at Kadin, stressed the need for renegotiations. He expressed the hope that trade terms could be renegotiated soon, noting that, based on a review conducted by the National Economic Council (DEN), Indonesia’s tariffs are actually quite low. |