The US tariffs on Indonesia, recently imposed at 32 percent under President Donald Trump’s new trade measures, will not significantly affect the Indonesian economy, according to the Asian Development Bank (ADB). In its April 2025 Asian Development Outlook (ADO), ADB emphasized that Indonesia’s exposure to the US market remains relatively low, minimizing the impact of the tariff hike.
Nguyen Ba Hung, an economist with ADB’s Southeast Asia department, stated during the ADO webinar in Jakarta, as cited by Antaranews.com, “Qualitatively, we believe the impact will not be as severe as the 32-percent tariff suggests.” He explained that exports to the United States only contribute about 2 percent to Indonesia’s gross domestic product (GDP), and thus pose limited economic risk.
ADB: US Tariffs on Indonesia Have Limited Effect
The ADB clarified that although the US decision to impose a 32 percent tariff on Indonesian goods appears significant, the actual economic impact remains low. The relatively small share of exports to the US means that the Indonesian economy continues to be driven by domestic consumption and investment.
Hung added that the tariff was largely a reaction to Indonesia’s persistent trade surplus with the US, but its practical implications are minimal. As of now, ADB has not released a quantitative projection of how the new tariffs may influence GDP growth, citing the need for more data. “We feel like it is still too early to make a quantitative assessment of the impact (of the US policy) on (Indonesia’s GDP) growth,” he said.
Indonesia Economic Growth 2025 Projection Remains Stable
Despite ongoing global trade tensions, ADB maintained its economic growth forecast for Indonesia at 5 percent for 2025. The projection reflects strong fundamentals, including steady private consumption and a gradual rise in investment.
The report also highlights that the government’s pro-growth fiscal stance, expected to continue through 2025, will support momentum. The fiscal deficit is projected to widen slightly to 2.5 percent of GDP, up from 2.3 percent in 2024. Manufacturing, agriculture, and service sectors like retail and logistics are expected to benefit from resilient domestic demand.
Read More: Indonesia Looks to Balance Trade with US
Trade Policy Tension Sparks Global Repositioning
While the US tariffs may not drastically affect Indonesia, they could still reshape global trade dynamics. Luhut Binsar Pandjaitan, Head of Indonesia’s National Economic Council, noted that shifts in trade routes and investment decisions could benefit Indonesia.
“The repositioning of global trade can be an opportunity for Indonesia to attract investment from abroad, making Indonesia its production base,” he said during a joint economic discussion with President Prabowo. Rising tariffs may encourage investors and exporters to shift away from the US, potentially making Indonesia a more attractive alternative.
ADB Emphasizes Indonesia’s Strong Economic Fundamentals
ADB underlined the strength of Indonesia’s economic structure, which remains rooted in domestic resilience. With consumption and investment as the main drivers, Indonesia has continued to post steady growth even amid rising global uncertainties.
Infrastructure development, social spending, and digital transformation have all supported equitable income distribution and increased productivity. These strong fundamentals make Indonesia less vulnerable to external shocks such as the recent tariff hike.
Regional Outlook: Mixed Growth Trends Across Asia
Beyond Indonesia, ADB projected a slight slowdown in Asia-Pacific economic growth. The region’s GDP is forecast to grow by 4.9 percent in 2025, down from 5 percent in the previous year. While the rise of artificial intelligence continues to boost semiconductor demand, higher tariffs and global trade uncertainty weigh on regional performance.
China, the region’s largest economy, is expected to grow at 4.7 percent in 2025 and 4.3 percent in 2026, down from 5 percent. However, South and Southeast Asia will see stronger momentum. India’s economy is projected to grow by 6.7 percent in 2025, and Southeast Asia’s overall growth is expected to remain at 4.7 percent.
Positive Outlook Despite Tariff Challenges
Although the 32 percent US tariffs on Indonesia reflect rising global trade friction, their actual impact on Indonesia’s economy appears minimal. ADB’s unchanged growth forecast and focus on domestic drivers reinforce a positive outlook.
Indonesia’s stable fundamentals, coupled with emerging opportunities from global trade shifts, position the country for continued economic progress despite external challenges.
Source: antaranews.com, bisnis.com, bloombergtechnoz.com
Image: Getty Images
