The Indonesia export tariffs debate intensified after U.S. President Donald Trump announced that tariffs on Indonesian goods would drop from 32% to 19%. While the move appears to offer relief, many experts and policymakers are questioning whether the trade deal benefits Indonesia or puts it in a vulnerable position.
Indonesia Export Tariffs Lowered to 19%
Under the newly announced trade agreement, Indonesian exports to the United States will now face a 19% import tariff, down from the previously threatened 32%. This includes major export categories such as:
- Footwear
- Palm oil
- Garments
- Rubber-based products
In exchange, Trump confirmed that U.S. exports to Indonesia would receive zero tariffs and face no non-tariff barriers. This imbalance has raised concerns among economists.
Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (Celios), stated, “A 19 percent tariff for Indonesian exports to the U.S., while the U.S. gets zero percent, poses a high risk to Indonesia’s trade balance.”
Trump Tariff Reduction Comes With Conditions
The Trump administration tied the 19% tariff rate to a series of purchase commitments from Indonesia. In a statement posted to Truth Social, Trump said:
“Indonesia has agreed to purchase USD 15 billion worth of American energy, USD 4.5 billion in agricultural products, and 50 Boeing aircraft, many of them 777s.”
Trump also emphasized the scale of U.S. gains under the agreement. “We have made a deal with Indonesia. I spoke to their president—great guy, very popular, strong, smart. And we agreed to a deal. We’re getting full access to Indonesia, everything. As you know, Indonesia is very strong in copper, and now we have full access to all of that,” he told reporters, as cited by the Financial Times.
In addition to these remarks, Indonesia made several key concessions during negotiations, including:
- Increased imports of soybeans, wheat, LPG, and LNG
- Relaxation of local content rules for U.S. tech companies like Apple and Microsoft
- Deregulation of import policies to ease market access
- Reduced import duties on U.S. goods, now cut to 0–5%
These terms have led many to argue that the agreement tilts in favor of the United States, granting it deep penetration into Indonesia’s strategic sectors while limiting gains for Indonesian exporters.
Experts Warn of Growing Trade Imbalance
Several economists believe the agreement could deepen Indonesia’s trade imbalance. Andalas University economist Syafruddin Karimi remarked, “When imported goods become cheaper due to zero tariffs, local businesses will face immense pressure, and the space for national industrialization will shrink.”
He warned that the trade arrangement might lead to a “dual-balance sheet” scenario. In this case, Indonesia could experience an overall global trade surplus but suffer a bilateral deficit with the U.S.
“This is not just a trade agreement but a one-sided procurement package that weakens the foundations of national economic independence,” Syafruddin added.
Bilateral Trade Agreement Seen as One-Sided
The unequal terms have prompted criticism over Indonesia’s position in the bilateral trade agreement. Syafruddin emphasized, “Indonesia appears more like a passive consumer market, not an equal and sovereign trade partner.” Bhima echoed this concern and urged the government to expand market access elsewhere. “Don’t overly rely on U.S. exports because this tariff deal still puts Indonesia at a disadvantage,” he said. He recommended enhancing access to the European Union and ASEAN regions.
Meanwhile, officials from the Indonesian government presented a more optimistic view. Hasan Nasbi, Head of Presidential Communications, said as cited by CNN Indonesia: “If we liken it to a house with a fence, the fence was initially 32 meters high. After negotiations, it’s now down to 19. That’s progress—a substantial one.”
He also highlighted the significance of President Prabowo Subianto’s direct negotiations with Trump. “This is an extraordinary negotiation directly conducted by our President with President Donald Trump, a meeting point between our government and the U.S.,” Nasbi stated.
What’s Next for Indonesian Exports?
Despite the tariff reduction, Indonesia faces important decisions moving forward. Coordinating Ministry for Economic Affairs spokesperson Haryo Limanseto noted that talks may continue beyond August.
“We don’t consider this over yet, as their letter also said the tariff would apply in August,” he said as reported by Tempo.co. He also confirmed that the U.S. praised Indonesia’s proposals during negotiations.
Looking ahead, policymakers may need to diversify export markets, reduce reliance on the U.S., and strengthen economic ties with other regions.
A Strategic Win or Economic Risk?
While Indonesia’s 19% export tarrifs appear to be a diplomatic achievement, the broader implications reveal a more complex reality. Economists warn of deepening trade imbalances and reduced industrial space. The deal includes significant financial commitments and opens Indonesia’s markets to duty-free U.S. goods. Whether this trade deal strengthens Indonesia’s position or exposes it to long-term vulnerabilities remains an open question.
Source: ft.com, tempo.co, cnnindonesia.com, finance.detik.com
Image: Win McNamee/Getty Images
