TEMPO.CO, Jakarta - Indonesian Trade Minister Budi Santoso believes that the reduction of reciprocal tariffs with the United States to 19 percent has the potential to attract significant investment to Indonesia.
Speaking to journalists at the Trade Ministry office on Thursday, July 17, 2025, Budi said, "We have two things that we can gain: investment inflow, and secondly, an increase in our exports."
Budi highlighted that Indonesia is currently the only ASEAN country to receive such a low tariff from the Trump administration. In comparison, Malaysia faces a 25 percent tariff, Thailand 36 percent, and Vietnam 20 percent.
Prior to negotiations with the Indonesian government, U.S. President Donald Trump had planned to impose a retaliatory tariff of 32 percent on Indonesian goods.
According to Budi, Indonesia's lower import tariffs compared to other ASEAN nations could create opportunities to enhance its competitiveness. "So, we are maximizing it to the best of our abilities," he affirmed.
Budi mentioned that 10 sectors could see a boost in investment, though he did not specify the commodities involved. Aside from identifying these opportunities, he also said that the government is mapping out competitor countries within these 10 sectors.
"For example, in the footwear product sector, how many competitors do we have? We need to assess our competitors' position," he explained.
When asked about the certainty of these retaliatory import tariffs from the United States, Budi could not confirm, noting, "We are waiting for it to come into effect starting August 1."
Concerns Over Potential Disadvantages
Despite the tariff reduction, Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (Celios), believes the outcome of the reciprocal tariff negotiations still disadvantages Indonesia. He stated that Trump's demand for U.S. exports to be exempt from tariffs and non-tariff barriers poses a high risk to Indonesia's trade balance.
"A 19 percent tariff for Indonesian exports to the U.S., while the U.S. can receive a 0 percent facility, actually carries a high risk for Indonesia's trade balance," Bhima told Tempo on Wednesday, July 16, 2025.
On one hand, according to Bhima, the 19 percent tariff will certainly benefit Indonesian exports such as footwear, ready-made clothing, palm oil (CPO), and rubber.
However, on the other hand, Bhima warned that imports of products from America will swell, particularly in the oil and gas sector, electronic products, aircraft components, cereals, and pharmaceutical products. Throughout 2024, the total imports of these five product types alone reached US$5.37 billion, equivalent to Rp87.3 trillion.
Anastasya Lavenia Yudi contributed to the writing of this article.
Editor's Choice: Trump Lauds Prabowo After Tariff Talks: "Popular, Strong, and Smart"
Click here to get the latest news updates from Tempo on Google News
Today's Top 3 News: Trump Announces Indonesia to Import U.S. Agricultural Products; Observers Issue Warning
5 jam lalu
Here is the list of the top 3 news on Tempo English today.
Trump Lauds Prabowo After Tariff Talks: "Popular, Strong, and Smart"
5 jam lalu
U.S. President Donald Trump has officially reduced import tariffs on Indonesian products to 19 percent, down from the previous 32 percent.
Indonesia to Import US Wheat and Corn as Trade Tariff Deal
6 jam lalu
Agriculture Minister Amran Sulaiman declares Indonesia's plan to import wheat and corn from the U.S. following a reciprocal trade tariff deal.
DEN Outlines Impact of Trump's Tariff Reductions on Indonesian Economy
10 jam lalu
DEN Chairperson Luhut Pandjaitan responded to U.S. President Donald Trump's decision to reduce import tariffs to 19 percent.
Inalum Eyes Domestic Market as Trump Imposes 50% Tariff on Aluminium
13 jam lalu
PT Inalum urges Indonesia to have an aluminium industry from upstream to downstream to boost domestic demand.
Trump Announces Indonesia to Import U.S. Agricultural Products; Observers Issue Warning
1 hari lalu
Agricultural observer Syaiful Bahari has responded to the U.S.'s new 19 percent reciprocal tariff on Indonesian products.
Trade Minister Expects Export Surge as Indonesia Secures Lower U.S. Import Tariff
1 hari lalu
Trade Minister Budi Santoso anticipated that these lower import tariffs would encourage greater investment in Indonesia.
Trump Says Patriot Missiles for Ukraine en Route from Germany
1 hari lalu
President Trump stated that Patriot missiles for Ukraine have already been sent from Germany and fully funded by European countries through NATO.
Prabowo Defends Plan to Buy 50 Boeing 777s: "We Need New Aircraft"
1 hari lalu
Prabowo expressed his willingness to purchase Boeing planes from the United States for Garuda Indonesia.
What Is Jerome Powell's Net Worth in 2025? Inside the Wealth of the Fed Chair
1 hari lalu
As of 2025, Jerome Powell's net worth is estimated to be between $20 and $50 million. Learn more about the Fed Chair's career and net worth.
