TEMPO.CO, Jakarta - United States President Donald Trump announced a new import tax policy called "Reciprocal Tariffs" on Wednesday, April 2, 2025. This new tax, known as the Trump tariff, applies to goods coming into the U.S. from many countries around the world, including Indonesia.
The trade rules were announced by Trump in the Rose Garden at the White House on Wednesday afternoon. The U.S. will also set a minimum tax of 10 percent for all imported goods. However, some countries will have to pay higher specific reciprocal tariffs.
In his speech, the Republican U.S. President gave a list of countries and the different reciprocal tariffs they would face. According to a post from the White House on Instagram, Indonesia is eighth on the list of countries most affected by the U.S. tariff increase, with a rate of 32 percent.
Around 60 countries will face reciprocal tariffs at half the rate they charge the U.S. The country with the highest reciprocal tariff is Cambodia, at 49 percent. Trump explained that these retaliatory tariffs are being put in place because some countries have already placed tariffs on goods coming from the U.S.
For example, Vietnam will face a reciprocal tariff of 46 percent. According to Trump, the country has had good discussions with America. "The problem is they charge us 90%. We’re going to charge them 46% tariff," Trump said in his speech at the White House, as quoted from the live broadcast by Sky News on April 2, 2025.
Impact on Indonesia's Economy
In response, the Institute for Development of Economics and Finance (Indef) pointed out that Indonesia's average yearly export market share to the U.S. is 10.3 percent. This market share is the second largest after Indonesia's exports to China.
The extra tariffs on Indonesian products will directly and greatly reduce Indonesia's exports to the U.S. Key exporters of important goods like textiles, shoes, electronics, furniture, and farm products will have to pay a lot more. "The result will be slower production and fewer jobs," said Indef Director Eisha Maghfiruha Rachbini in a written statement on Thursday, April 3, 2025.
Therefore, Indef suggests several steps the government needs to take to deal with Trump's tariff policy. Eisha believes that Indonesia needs to start trade talks with the U.S. as soon as possible.
Starting negotiations quickly is crucial to lessen or reduce the impact of the import tariffs on Indonesian exports to the U.S. "Strong diplomatic talks are crucial in mitigating the impact of the trade conflict with the U.S.," Eisha said.
Furthermore, Eisha mentioned that the government needs to make the most of trade agreements between two countries and many countries, and also start cooperation agreements with countries they don't usually trade with. This is to help export products that will be affected, like textiles, shoes, electronics, furniture, and farm and plantation products.
"This way, exporters and affected industries can redirect their export markets," she said.
Meanwhile, Secretary General of the Indonesian Young Entrepreneurs Association (Hipmi), Anggawira, urged the government to speed up trade agreements with countries in the European Union, the Middle East, and Africa to find more places to sell exports and depend less on the United States.
"Speed up trade agreements with the European Union, the Middle East, and Africa to depend less on the U.S.," said Anggawira when confirmed in Jakarta on Thursday, April 3, 2025.
Anggawira mentioned that diversifying export markets through faster trade agreements is a policy that needs to be considered for the future. In the short term, he said, the government needs to reassure businesses with promises to keep the market stable and confident, including helping the financial market and giving support to affected businesses.
Expanding trade targets, he said, can also be done by optimizing the Regional Comprehensive Economic Partnership (RCEP) trade agreement. RCEP is a trade bloc in the Asia Pacific involving 15 countries with one-third of the world's total economy. "Optimizing the RCEP agreement to increase exports to the Asia-Pacific," said Anggawira.
According to him, the Indonesian government needs to respond quickly and correctly to Trump's policy, which the powerful leader called "Liberation Day." The government's timely and appropriate response will have a real impact on businesses, he said. "Without clear actions, economic uncertainty could get worse and have bad results," he continued.
Ervana Trikarinaputri and Ilona Estherina contributed to the writing of this article.
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