Understanding US Reciprocal Tariffs and Their Impact on Indonesia’s Economy
- Muhammad Silvansyah Syahdi Muharram
- 2 days ago
- 2 min read
As of April 5, 2025, the United States (US) has imposed a base tariff of 10% on all imported products from around the world. Its objectives are to boost the US economy through the sale of domestic goods, reduce dependence on other countries, and encourage foreign companies to open factories in the US.
In addition, US President Donald Trump has enacted reciprocal tariffs (often called “Trump tariffs”), with rates that vary by country. Indonesia itself is subject to a 32% tariff, which was originally set to take effect on April 9, 2025, but has been postponed for the next 90 days while negotiations proceed.
Not every country has entered talks—China, Canada, and the European Union have retaliated by raising their own import duties, and Brazil plans to file a complaint with the World Trade Organization.
Why Is Indonesia Choosing to Negotiate?
Indonesia’s largest exports to the US include cocoa, electronic goods, footwear, and semiconductor and telecommunications equipment. With a 32% reciprocal tariff, the market price of these products will rise, making them less competitive against local alternatives.
As a result, demand will drop, export volumes will shrink, and Indonesia’s trade balance will suffer. At the grassroots level, the public could face a sustained weakening of the rupiah and widespread layoffs as export‑dependent companies see their profits decline.
Indonesia’s Negotiation Points
Viewing the US as a strategic partner, the Indonesian government is seeking to avoid a trade war by proposing:
Increased import volume from the US through a review of bans and trade restrictions, especially on agricultural products, technical equipment, and oil & gas.
Provision of fiscal and non‑fiscal incentives for US products, such as import‑duty concessions.
Relaxation of the domestic content requirement (TKDN) for technology industries, benefiting companies like Apple, Microsoft, and Oracle.
Disclaimer: The content is made for educational purposes, not a recommendation to buy or sell a particular stock. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (OJK).
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