Facts about Trump's Import Tariff Policy: Reasons, Impacts, and Indonesian Govt's Stance

TEMPO.CO, Jakarta - United States (US) President Donald Trump officially announced new import tariffs for a number of their trading partners. America imposes varying tariffs on a number of countries. Indonesia is the eighth country with the highest tariff, which is 32 percent.

The White House calls the implementation of this global tariff as the US's method of implementing the golden rule of the Trump era. "Today's action (the implementation of tariffs) is our way of asking other countries to treat us the same way we treat them. This is the Golden Principle for Our Golden Age," was written in the White House fact sheet document on global import tariffs published on April 2, 2025.

Reporting from the White House website, this new tariff policy will be implemented in stages. The first stage is a general tariff of 10 percent for all countries which will be effective starting Saturday, April 5, 2025. Then, special tariffs for several countries including Indonesia will be implemented starting Wednesday, April 9, 2025. This additional policy was implemented by the US in response to the trade deficit that occurred with these countries, including Indonesia.

Tempo summarizes a number of important facts related to this issue, here they are:

Trump's Reasons for Raising Import Tariffs

Trump said the implementation of the tariffs was a form of retaliation because so far trading partners have experienced a trade surplus at the same time, America has experienced a deficit when partnering with that country. According to Trump, the trade balance deficit has caused the capacity of the manufacturing industry in his country to decline. As a result, US economic growth is threatened to slow down.

Trump also said that a number of countries, including Indonesia, are taking advantage of his country unfairly in international trade. For example, Indonesia, Trump gave the example of import tariffs for Indonesian ethanol commodities which are higher than the US. "Indonesia (30 percent) applies higher tariffs for ethanol than the United States (2.5 percent)," as written in the White House Fact Sheet published on the whitehouse.gov page on April 2, 2025.

Negative Impacts: Rupiah Weakens, Debt Swells to a Storm of Layoffs

Head of the Center for Industry, Trade and Investment INDEF Andry Satrio Nugroho said this policy will make Indonesian products entering the market more expensive, so that the competitiveness of the products will be defeated by other products. This will cause buyers from the US to reduce their purchases or switch to other suppliers. Meanwhile, America has been the second largest export destination after China. This is what has the potential to cause a massive layoff storm.

In addition, Professor at the Faculty of Economics and Management, IPB University, Didin S. Damanhuri, said that this retaliatory import tariff policy has the potential to put pressure on the world economy and put pressure on currencies in several countries, including the rupiah. The rupiah is projected to reach Rp17,000 per US dollar.

Didin said that the depreciation of the rupiah would ultimately burden domestic companies. Especially for those who have debts in dollars of more than 50 percent. With the burden of debt ballooning, the company is forced to carry out efficiency by reducing production and, worst of all, reducing the workforce or layoffs.

The Indonesian Government's Stance

Responding to Trump's decision, President Prabowo Subianto instructed the cabinet to improve and eliminate regulations that are inhibiting. "President Prabowo has instructed the Red and White Cabinet to take strategic steps and structural improvements as well as deregulation policies, namely simplifying regulations and eliminating inhibiting regulations, especially related to Non-Tariff Measures (NTMs)," said Coordinating Minister for Economic Affairs Airlangga Hartarto in a written statement on Thursday, April 3, 2025.

According to him, a number of ministries and institutions have coordinated and will send Indonesian representatives to the US to conduct negotiations. "The government will continue to communicate with the US Government at various levels, including sending a high-level delegation to Washington DC," said Airlangga.

Ilona Estherina and Sultan Abdurrahman contributed to the writing of this article.

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