US Government Shutdown Halts Trade Talks, Airlangga Says
Key Takeaways
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JAKARTA, Investortrust.id — Coordinating Minister for Economic Affairs Airlangga Hartarto says the shutdown of the United States government has stalled ongoing trade negotiations with Washington, although he emphasized that talks with the European Union remain on track.
The shutdown-driven pause comes at a sensitive moment, with both countries seeking to realign their trade relationship amid shifting global supply chains. Analysts note that prolonged delays could slow Indonesia’s broader strategy to diversify export markets beyond China.
Speaking in Jakarta on Friday, Oct 3, 2025, Airlangga explained that the political deadlock in Washington has temporarily frozen discussions. “Yes, the impact is clear. When it comes to trade negotiations, with the shutdown, everything stops for now,” he told reporters.
Airlangga stressed, however, that the disruption in the US would not affect Indonesia’s ongoing negotiations with Brussels on reciprocal tariffs. “I don’t think it has much influence. Relatively, everything has already been finalized,” he said.
Why US-Indonesia Trade Talks Matter
The negotiations with Washington are seen as pivotal because the United States is one of Indonesia’s largest non-Asian trading partners. Bilateral trade reached more than $40 billion in 2024, covering commodities such as palm oil, rubber, textiles, electronics, and footwear on Indonesia’s side, and machinery, agricultural products, and services from the US.
A central issue in the talks has been the imposition of reciprocal tariffs by the US on Indonesian exports, particularly palm oil and rubber-based goods, which Jakarta argues threaten the competitiveness of its producers. At the same time, Washington has pushed for greater market access in Indonesia for US agricultural products, healthcare services, and digital platforms.
For Indonesia, securing more favorable terms is crucial to support its downstreaming policy, which aims to increase the value of raw commodity exports by expanding domestic processing industries. Failure to reach an agreement could mean continued pressure on Indonesia’s current account balance and a potential dampening of investor confidence in the trade sector.
Partial Shutdown
The US government entered a partial shutdown on Wednesday, Oct 1, 2025, after Congress and the White House failed to reach a funding deal amid deep partisan divisions. The impasse, the 15th shutdown since 1981, is expected to drag on and could cost the federal government $400 million per day in lost productivity while forcing 750,000 federal workers on unpaid leave.
The shutdown has also halted the release of key labor market data for September, disrupted air travel, suspended scientific research, delayed military pay, and triggered widespread furloughs across government agencies.
Historically, the longest US government shutdown lasted 35 days, from Dec 22, 2018, to Jan 25, 2019, during President Donald Trump’s first term, following a dispute over funding for a US-Mexico border wall.
Trump, who is seeking to reduce federal employment by about 300,000 positions by December, has warned Democrats in Congress that the current shutdown could pave the way for “irreversible” measures, including further job cuts and program reductions.
Reuters reported that the closure began just hours after the Senate rejected a short-term spending bill intended to keep the government running until Nov 21. Democrats opposed the proposal because Republicans excluded provisions to extend healthcare benefits for millions of Americans set to expire at the end of the year. Republicans insisted that the issue should be negotiated separately.