Judul : Trump's 32 Percent Tariff Impact on Indonesia Starts in August 2025
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Trump's 32 Percent Tariff Impact on Indonesia Starts in August 2025
PEOPLE'S THOUGHTS –
U.S. President Donald Trump officially announced import tariffs of 32 percent on Indonesian products, effective from August 1, 2025. The policy was announced through a post on his Truth Social platform, which also included an official letter to Indonesian President Prabowo Subianto.
"Please understand that this 32 percent figure is still much lower than what is needed to eliminate the trade deficit with your country," wrote Trump in a letter dated July 7.
Trump emphasized that if Indonesia retaliates with similar tariffs, the United States will double the current tariff rates.
"Any number you choose will be added to the 32 percent rate we charge," he said.
However, Trump also opened the possibility for renegotiation. If Indonesia is willing to open up the market, which has been considered closed so far, then the US is ready to consider adjustments, including the removal of tariffs and non-tariff barriers.
Economic Impact on Indonesia
This policy has the potential to trigger economic shocks, both globally and domestically. Referring to similar experiences during the 2019 U.S.-China trade war, high tariffs at that time caused a sharp decline in global trade growth and weakened the stability of the global supply chain.
The latest economic model predicts that Trump's current tariff policy could cut the US Gross Domestic Product (GDP) by up to 6 percent and lower average wages by 5 percent. Domino effects are also expected to be felt by trading partner countries such as Indonesia.
The Indonesian government estimates that the national economic growth will be reduced by 0.3 to 0.5 percent due to this policy. In addition, the risk of mass layoffs (PHK) in labor-intensive sectors such as textiles and footwear is increasing.
Muhammad Edhie Purnawan, Ph.D., an economist from the Faculty of Economics and Business, Universitas Gadjah Mada, stated that these additional tariffs increase the total tariff burden on Indonesian products by up to 37 percent.
"The impact on Indonesia's economy is a decrease in exports because Indonesian goods become more expensive and reduce competitiveness," said Edhie.
She explained that industries that have been the backbone of exports, such as electronics, clothing, and footwear, will be the most affected. In 2024, Indonesia's exports to the US recorded a surplus of USD 16.84 billion—now threatened to be eroded.
Short-Term Risks and Long-Term Opportunities
Besides the potential depreciation of the rupiah and rising inflation, Edhie warned about the possibility of reduced tax revenues and a worsening national fiscal balance. He also highlighted the threat of increasing poverty rates, similar to what Vietnam experienced during the 2019 trade war.
Nevertheless, this new tariff also opens new opportunities. Compared to Vietnam, which is subject to a 46 percent tariff, and Cambodia, 49 percent, Indonesian products are still relatively cheaper for American consumers. This provides an opportunity to increase market share in the clothing and footwear sector.
Indonesia can also become a destination for investment relocation from countries with higher tariffs, such as China.
"Indonesia needs to carefully read the global situation and adjust its trade strategy. Market volatility such as the decline of the S&P 500, Nasdaq, and Dow Jones indices in recent days shows global uncertainty that should be used as a momentum," explained Edhie.
It emphasizes that this tariff is not just an economic issue, but also a geopolitical strategy and negotiation. In the context of game theory, this tariff is an attempt by the US to change the "payoff matrix" in bilateral trade relations, forcing Indonesia to reassess its export and trade diplomacy strategies.
"This tariff is indeed designed to give the US an advantage in negotiations, but its initial impact on Indonesia remains negative. The government must immediately carry out market diversification and strengthen economic diplomacy," Edhie concluded.***
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