Trump Tariffs Threaten Indonesian Palm Oil ‍Exports

JAKARTA ‍– New tariffs imposed by the‍ United States are posing a notable ⁢challenge to indonesias palm oil industry, with a 32% import duty now levied on various export products, including crude palm oil (CPO). The tariffs are causing concern among farmers and industry stakeholders about potential impacts on prices and the demand for fresh fruit bunches (FFB).

Mansuetus Darto of the National Palm Oil Farmers’ Union (SPKS) suggests the tariffs are not solely about⁤ economic protectionism. He⁣ believes they are linked to compliance with international regulations ⁢and production traceability.

“Reports indicate ⁣that several⁤ countries exporting goods to the ⁤U.S. have⁣ violated regulations, resulting in ⁢these high tariffs,” Darto told CNBC Indonesia on Friday. “This raises questions about whether our⁤ goods meet U.S. legal compliance standards, leading to the ‍32% duty.”

Export Decline and‍ Economic Concerns

SPKS data indicates that Indonesian CPO ⁤exports to the U.S. reached 1.4 million tons in 2024. However,exports in January ⁣2025 alone fell by 20% compared to the same period last year,even before the tariff policy‍ was officially⁣ implemented.

Darto warned that the U.S.economic situation could have broader repercussions for Indonesia. “During the Lehman Brothers crisis in 2008,⁤ palm oil prices plummeted to Rp100 per kilogram,” he recalled. “Farmers⁣ struggled, and some even had to withdraw their children from college. A struggling U.S. economy can substantially impact us.”

Domestic Policies‍ Add Pressure

Adding to the industry’s challenges, the Indonesian government imposes export tariffs, including export levies ‍(PE) ⁣and palm oil fees (BK), totaling $170 ⁤per metric ton. ⁣These measures are seen as an additional ‍burden for farmers and businesses, particularly as global ⁢markets contract.

“While increasing biodiesel production to 40% is an option, the export price of CPO remains attractive,” Darto explained. “If export markets shrink ⁢and domestic demand isn’t ready to compensate,⁣ the ‍impact will ultimately fall on the farmers.”

Efficiency Not a Sustainable Solution

Darto argues that cost-cutting measures, such as reducing fertilizer use or working hours, are‍ not viable long-term solutions, as they can negatively impact production. He expressed concern⁤ that palm oil companies might begin refusing or limiting purchases of⁢ FFB from independent farmers.

“If companies prioritize palm oil from their own plantations and offer minimal prices for FFB, farmers ⁣could face bankruptcy,” he ⁢stated.

Call ⁢for Government Action

Darto⁣ emphasized that ⁣Indonesia should not passively accept the situation. He urged the government to actively pursue new markets and adapt to global sustainability standards, such as the European Union Deforestation Regulation (EUDR), set ⁢to ⁣take effect in ‍2026. ⁣He also called for a reduction in ⁤PE and BK rates and the strengthening of legal certainty to foster a healthier business habitat.

“we must challenge⁢ the European Union ⁤to ensure compliance ⁢while also supporting our farmers,” Darto said. “We need an‍ independent national ⁣palm oil body, not one caught in⁣ the crossfire.”

Streamlining Regulations and Governance

Darto also stressed the need to improve regulations ⁤and governance within the domestic palm oil sector to combat ‍corruption and expedite strategic decision-making.

“The ministries overseeing palm oil frequently enough have overlapping responsibilities,” he noted. “This needs to be streamlined to improve⁢ effectiveness. ⁢This is crucial for the future of⁢ Indonesian palm oil.”