TEMPO.CO, Jakarta - Chairperson of the National Economic Council (DEN) Luhut Binsar Pandjaitan responded to the decision of the President of the United States of America, Donald Trump, who lowered import tariffs from 32 percent to 19 percent for Indonesian export products.
Luhut is confident that this policy will make Indonesian export products more competitive in the global market. According to him, the tariff adjustment is part of a strategic policy aimed at strengthening the supply chain, attracting value-added investments, and bolstering Indonesia's standing as a reputable trading partner.
"We are not rolling out the red carpet for foreign parties, but instead opening up greater opportunities for Indonesian products and business players to compete in the global market," said Luhut in a statement in Jakarta, Thursday, July 17, 2025, as quoted from Antara.
DEN conducted economic simulations with two main scenarios: one with a 32 percent tariff and another with a 19 percent tariff. According to Luhut, the second scenario showed a far more positive economic impact.
According to DEN's calculations, Gross Domestic Product (GDP) is predicted to increase by 0.5 percent, driven by increased investment and consumption. Meanwhile, employment is expected to grow by 1.3 percent, while the community's welfare is expected to increase by 0.6 percent.
Additionally, the simulation predicts a 1.6 percent increase in investment, suggesting the potential relocation of global industries to Indonesia, especially in labor-intensive sectors such as textiles, garments, footwear, furniture, and fisheries.
"Indonesia has the lowest additional U.S. tariffs compared to countries with a trade surplus with the U.S. and also among other ASEAN countries. This certainly provides great opportunities for Indonesia," said Luhut.
He is also confident that the tariff reduction will create significant opportunities for labor-intensive industries in Indonesia, such as textiles and textile products, footwear, and furniture, to expand market access in the U.S. with lower cost barriers.
This policy not only drives exports, but it is also said to have the potential to attract foreign investors to relocate their industries to Indonesia and take advantage of tariff benefits when accessing the U.S. market.
Furthermore, Luhut stated that DEN also sees this agreement as an important foothold to accelerate the deregulation agenda and reduce logistics and production costs in the country (high-cost economy). In this way, not only are exports encouraged, but also the overall national economic competitiveness.
"DEN believes that the right direction of national economic policy based on data will be the key to accelerating inclusive and competitive growth in the global era," said Luhut.
Luhut also considers the agreement reached as a form of long-term economic diplomacy. "A vision based on national interests."
According to Luhut, the agreement marks a strategic step for Indonesia, as it simplifies tariffs on most imported products from the U.S. This step is part of a measured and mutually beneficial reciprocal approach.
"This policy is not a unilateral concession, but a strategy to create investment opportunities, encourage technology transfer, and expand Indonesia's export market access more competitively," said Luhut.
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