Starting August 1, 2025, the United States will lower its import tariffs on Indonesian products from 32% to 19%. This shift followed a strategic agreement between U.S. President Donald Trump and Indonesian President Prabowo Subianto, signaling a new development in bilateral economic diplomacy.
The new 19% tariff applies to major Indonesian exports to the U.S., including textiles, footwear, furniture, electronics, and fisheries. While the rate remains restrictive, it is now one of the lowest among ASEAN countries, lower than Malaysia (25%), the Philippines (20%), and Thailand (36%).
This article explores the legal basis, economic implications, and strategic risks associated with the new tariff regime, and what it means for Indonesia’s domestic industries and international trade standing
Negotiations Behind the Tariff Cut
The tariff reduction is part of the Trump administration’s broader push to reduce U.S. trade deficits. Initially proposing a steep 32% tariff on Indonesian goods, the U.S. government adjusted the rate after a string of negotiations and concessions from Indonesia.
Indonesia’s side of the deal includes significant purchasing commitments:
- USD 15 billion in U.S. energy imports
- USD 4.5 billion in U.S. agricultural goods
- Procurement of 50 Boeing aircraft
In return, U.S. goods will gain preferential access to Indonesia, with reduced tariffs and minimal non-tariff barriers. The arrangement benefits U.S. exporters but presents challenges for Indonesian manufacturers, especially in sensitive sectors.
Indonesia’s Tariff Regulations and International Trade Law
In Indonesia, import tariffs are governed by Law No. 17/2006 on Customs, which amends Law No. 10/1995 on Customs. According to Article 1 point 15 of the law:
“Import duty is a state levy imposed on imported goods under this law.”
Tariffs serve two main purposes:
- As a source of government revenue
- As a policy tool to protect domestic industries
Further, Article 13 point 1 of the law allows Indonesia to adjust import duties based on:
- International agreements or trade negotiations
- Specific import categories (e.g., carried goods, postal shipments, etc.)
Thus, Indonesia retains the legal authority to adapt its trade policy in response to external tariff actions, such as those imposed by the U.S., while aligning with its domestic economic interests.
Key Impacts on the Indonesian Economy and Industry
While the 19% tariff appears to be more manageable than the initially proposed 32%, it poses significant challenges as reported by kompas.com:
- Reduced export competitiveness.
Although the rate is lower than tariffs on other ASEAN countries, Indonesian products remain more expensive compared to those from countries with free trade agreements with the U.S.
- Trade imbalance risk
The agreement allows duty-free U.S. goods to enter Indonesia, while Indonesian exports remain subject to tariffs. This structural asymmetry may widen Indonesia’s trade deficit and weaken local industries.
- Import surge and industry pressure
Sectors like agriculture, energy, aviation, electronics, and pharmaceuticals are expected to see increased U.S. imports, which may undermine local producers—especially those lacking subsidies or tariff protections.
- Fiscal and current account strain
Indonesia’s USD 20+ billion commitment to purchase U.S. goods could pressure the current account balance and reduce fiscal flexibility.
- Lack of safeguards
The deal reportedly lacks safeguard mechanisms to protect strategic sectors from import surges or price dumping, making Indonesian industries more vulnerable
Also read: A Simple Guide to Legal Requirements for Exporting Your Business
Why This Matters: Beyond Tariffs, It’s About Trade Strategy
This tariff agreement is not just a matter of customs duty, it reflects a broader trade and industrial policy challenge for Indonesia. Without a proactive legal and regulatory strategy, Indonesia risks:
- Losing export markets due to reduced competitiveness
- Becoming overly reliant on U.S. imports, especially in high-value sectors
- Weakening domestic industries in the absence of sufficient protections
For businesses, this situation highlights the need for strategic legal counsel, not just to comply with regulations but to anticipate risks and leverage opportunities under shifting global trade dynamics.***
Also read: How to Export Indonesian Handicrafts: Legal Guide for Foreign Businesse
Daftar Hukum:
- Undang-Undang Nomor 17 Tahun 2006 tentang Perubahan Atas Undang-Undang Nomor 10 Tahun 1995 tentang Kepabeanan (“UU Kepabeanan”).
Referensi:
- Isi Lengkap Surat Trump ke Prabowo Soal Tarif, AS Tekor Dagang dengan RI. Kompas.com. (Diakses pada 11 Juli 2025 pukul 10.05 WIB).
- Ini Surat Presiden AS Donald Trump Kepada Presiden RI Prabowo Soal Tarif Impor. Media Indonesia. (Diakses pada 11 Juli 2025 pukul 12.55 WIB).
- Tarif Impor AS dari RI Turun Jadi 19 Persen, tapi Ada Ancaman Mengintai. Kompas.com. (Diakses pada 17 Juli 2025 pukul 10.34 WIB).
- Tarif Trump untuk RI Turun Jadi 19 Persen, Benarkah yang Terendah di ASEAN?. Kompas.com. (Diakses pada 17 Juli 2025 pukul 12.24 WIB).
- Trump Kenakan Tarif Impor 19%, Ini Untung Rugi bagi Ekonomi dan Industri RI. Katadata. (Diakses pada 17 Juli 2025 pukul 13.36 WIB).