RI to Cooperate with ASEAN to Face US Reciprocal Tariffs

JAKARTA, KOMPAS – The Indonesian government acknowledges that the imposition of a reciprocal tariff of 32 percent will significantly impact the competitiveness of Indonesian export products in the U.S. market. Therefore, the Government of Indonesia is preparing a number of strategic measures and inviting ASEAN member countries to respond to the implementation of this tariff.

On April 2, 2025, local time, U.S. President Donald Trump imposed a reciprocal tariff on Indonesia amounting to 32 percent, based on a base tariff of 10 percent applied by the U.S. to all countries. The U.S. reciprocal tariff will take effect starting April 9, 2025.

The Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso, on Thursday evening (3/4/2025), stated that the imposition of reciprocal tariffs would have a significant impact on the competitiveness of Indonesia's export products in the U.S. market. So far, Indonesia's main export products in the U.S. market include electronics, textiles and textile products, footwear, palm oil, rubber, furniture, shrimp, and marine fishery products.

"We will immediately calculate the impact of the U.S. reciprocal tariff imposition on those commodities. We will also take strategic steps to mitigate the negative effects on Indonesia's national economy," he stated through a press release in Jakarta.

Susiwijono explained that since early 2025, the Government of Indonesia has prepared various strategies and measures to address the implementation of new tariffs by the United States. The Government of Indonesia has also negotiated with the United States Government.

The inter-ministerial and institutional team, Indonesia's representatives in the US, and national business actors have been coordinating intensively to address the US reciprocal tariffs. In addition, the Indonesian Government will continue to communicate with the US Government at various levels.

"We will soon send a high-level delegation to Washington DC to directly negotiate with the US Government. Indonesia has also communicated with Malaysia as the holder of the ASEAN Chairmanship to take joint steps, considering that all 10 ASEAN countries are affected by the imposition of reciprocal tariffs by the US," he said.

At the ASEAN level, Indonesia's reciprocal tariff is still lower than that of several ASEAN member countries. Cambodia is subject to the highest reciprocal tariff at 49 percent, followed by Vietnam at 46 percent and Thailand at 36 percent. However, Indonesia's reciprocal tariff is still higher compared to Malaysia (24 percent), Singapore (10 percent), and the Philippines (17 percent).

The President asked the relevant ministries/institutions to deregulate or simplify and eliminate regulations that hinder trade, especially those related to non-tariff policies.

According to Susiwijono, since early 2025, the Indonesian government has prepared various strategies and steps to deal with the implementation of new US tariffs. The Indonesian government has also negotiated with the US government.

As part of the negotiations, the Indonesian government has prepared various steps to address the issues raised by the US. These issues are outlined in the annual report of the National Trade Estimate (NTE) 2025 published by the Office of the US Trade Representative (USTR).

He also stated that Indonesian President Prabowo Subianto has instructed the Red and White Cabinet to take a number of strategic steps and structural improvements. In fact, the President asked related ministries/institutions to deregulate or simplify and eliminate regulations that hinder trade, especially those related to non-tariff policies.

In the US NTE 2025, the imposition of US reciprocal tariffs on Indonesia is not only based on considerations of the trade balance deficit and tariff barriers. A myriad of non-tariff barriers from Indonesia, including in the fiscal, taxation, food, and import licensing sectors that are considered detrimental to the US, are also taken into account.

Kompas noted, in NTE 2025, the US assessed that the process of issuing import approval (PI) in Indonesia is quite complicated because it must go through various ministries/institutions. Regarding food imports, for example, the issuance of PI requires recommendations from related ministries and must be based on the balance of commodity balances.

In fact, the US also said that Indonesia imposed restrictions on the import of feed corn by limiting the import rights of Perum Bulog. The US also questioned the complexity of obtaining halal certification and meeting the domestic content level (TKDN) requirements in Indonesia.

In addition, Indonesia is also considered to have implemented strict control over sugar imports through a quantitative import restriction mechanism (import quota setting). In fact, the US also highlighted the provision of interest subsidies on loans to Indonesian micro, small, and medium enterprises (MSMEs) (Kompas, 3/4/2025).

In addition to strategic steps in the trade sector, Susiwijono added, the Indonesian government will also maintain the trust of market players. The Indonesian government is committed to maintaining the stability of Government Securities (SBN) yields amidst global financial market turmoil following the announcement of US reciprocal tariffs.

Together with Bank Indonesia (BI), the Indonesian Government also continues to maintain the stability of the Rupiah exchange rate. BI and the Indonesian Government will also continue to ensure that foreign exchange liquidity is maintained to support the needs of business actors and maintain overall economic stability.

"We will also improve the investment climate and increase economic growth, as well as create extensive employment opportunities," said Susiwijono.

In his Instagram Story, Trade Minister Budi Santoso made a statement regarding the US reciprocal tariff policy on Thursday (3/4/2025). "Today, the government is moving quickly to coordinate and communicate between ministries and related institutions to respond to the Trump 2.0 tariff policy... so that the steps taken by the Indonesian government remain measurable and have a positive impact on the Indonesian economy," he wrote.

Previously, Budi stated that he would not adopt the protectionist path because it could backfire on Indonesia's export performance. Indonesia will prioritize strategic dialogue with countries that are protective of Indonesia.

To mitigate the US tariff hike plan, Indonesia will also take the path of trade diplomacy by dialogue or negotiation with the US. The Ministry of Trade even plans to reactivate and renew the Trade and Investment Framework Agreement (TIFA) with the US which was agreed in 1966.

In addition, the government will also explore a limited trade deal. The goal is to reduce tariffs and resolve non-tariff issues between Indonesia and the US.