TEMPO.CO, Jakarta - The Executive Director of the Center of Economic and Law Studies (Celios), Bhima Yudhistira, believes that the recently agreed-upon import tariff arrangement for Indonesian products could actually weaken Indonesia's trade position.
This agreement was officially announced by U.S. President Donald Trump following negotiations with President Prabowo Subianto. Through his Truth Social account, Trump stated that import tariffs on Indonesian goods entering the U.S. would be lowered from 32 percent to 19 percent.
"A 19 percent tariff on Indonesian exports to the U.S., while the U.S. receives a 0 percent rate in return, poses a serious risk to Indonesia's trade balance," Bhima told Tempo on Wednesday, July 16, 2025.
Economists React
Bhima acknowledged that the 19 percent tariff reduction could benefit certain Indonesian export sectors, including footwear, garments, palm oil, and rubber.
However, he also warned of a potential surge in U.S. imports into Indonesia, particularly in oil and gas, electronics, aircraft spare parts, cereals, and pharmaceuticals. The total import value of these five product categories in 2024 alone was estimated at US$5.37 billion, or around Rp87.3 trillion.
Economist Syafruddin Karimi of Andalas University expressed a similar view. He argued that the trade agreement risks creating an imbalance for Indonesia. With lower tariffs making U.S. imports cheaper, domestic producers could face heightened competitive pressure, which may hinder the growth of local industries.
Syafruddin also raised concerns about the potential for a bilateral trade deficit with the United States. While Indonesia’s overall trade balance might remain in surplus, he warned that its trade with the U.S. could turn into a deficit, even under favorable global economic conditions.
According to the economics professor from FEB Unand, the agreement portrays Indonesia more as a passive consumer market than as a sovereign and equal trade partner.
Trump’s Announcement on the Deal
In his Truth Social post, Trump described the deal with Prabowo as a historic breakthrough. He claimed that, for the first time, the United States had gained full and unrestricted access to the Indonesian market.
Trump also revealed that Indonesia had committed to purchasing various American products under the agreement. These include US$15 billion worth of energy, US$4.5 billion in agricultural goods, and 50 Boeing aircraft, mostly type 777.
He said this agreement would open new doors for American farmers, ranchers, and fishermen to access the Indonesian market, which has a population exceeding 280 million.
He added that if any re-exported goods from third countries face higher tariffs, additional import duties would be imposed on Indonesia. Trump concluded by thanking the Indonesian people for their cooperation in addressing the trade deficit and pledged continued benefits for both nations.
Anastasya Lavenia Yudi and Rafif Nur Tahta Bagaskara contributed to the writing of this article.
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