Indonesia Braces for Trump’s Tariff Shock, Eyes Billions in Export Opportunity
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JAKARTA, investortrust.id — Indonesia is preparing for both risks and opportunities as former United States President Donald Trump prepares to announce sweeping new import tariffs targeting strategic trade partners, particularly China. The looming policy shift has raised concerns over market volatility and global supply chain disruptions—but also opened a potential export windfall for Indonesia, estimated at $1.69 billion over the next four years.
Trump is scheduled to unveil the policy from the White House Rose Garden on Wednesday afternoon local time, or early Thursday morning in Jakarta. Billed as “Liberation Day,” the announcement is expected to confirm higher tariffs aimed at countries with large trade surpluses against the U.S., chiefly China. Though details remain under wraps, the White House said the measures will take effect immediately, leaving little room for negotiation.
In Jakarta, policymakers and economists are monitoring developments closely. David Sumual, Chief Economist at PT Bank Central Asia Tbk, warned that should Trump proceed with the tariffs as expected, Indonesia could experience continued negative sentiment in capital markets and a ripple effect on its real economy.
“Persistent inflation in the U.S. will make it difficult for the Federal Reserve to lower interest rates, and that affects global liquidity,” said Sumual. “Indonesia will feel the impact through a drop in global trade volumes, particularly in energy and plantation exports.”
At the same time, however, Indonesia may benefit from trade realignments triggered by the tariffs. At a seminar hosted by the Indonesian Chamber of Commerce and Industry (Kadin) on Tuesday, March 25, 2025, global trade expert and Datawheel Founder Professor César Hidalgo said U.S. tariffs on Chinese goods could boost exports from six countries, including Indonesia.
According to a joint study by the Kadin Institute, Yayasan Berbakti Semangat Indonesia, and Datawheel, the redirection of U.S. demand could drive up Indonesia’s exports by $1.69 billion or Rp 24.08 trillion (at an exchange rate of Rp 16,590 per US dollar) over four years.
“Indonesia is uniquely positioned geopolitically,” said Hidalgo. “It can trade with China, the Middle East, the U.S., and even Russia, without triggering political backlash. That’s a rare strategic asset in today’s unstable world.”
The sectors expected to benefit include footwear, textiles, electronics, light furniture, knitted sweaters, luggage, toys, women’s underwear, and plywood. While competition remains intense—particularly from Vietnam, Thailand, and Malaysia—Indonesia ranks second only to Vietnam in U.S. imports of footwear and rubber shoes, and second to Bangladesh in knitted sweater exports.
“With Chinese goods becoming more expensive due to tariffs, similar Indonesian products will become more competitive in the U.S.,” said Rosan Perkasa Roeslani, Head of the Investment Ministry and the Indonesia Investment Coordinating Board. “American companies that used to depend on Chinese imports will now look elsewhere, and Indonesia must seize that opportunity.”
Deputy Foreign Minister Arif Havas Oegroseno underscored the need to enhance market access through trade negotiations. “We can use this moment to push for tariff reductions or even elimination on Indonesian goods such as textiles, footwear, electronics, and agricultural products,” he said. “That would significantly improve our competitiveness in the U.S. market.”
Even so, the risks remain real. Trump’s earlier tariffs—including a 25% duty on steel, aluminum, and imported cars—have already unsettled global markets. The European Central Bank’s President Christine Lagarde warned that the upcoming policy would “shake global trade as we know it.” Canada, the EU, and several Asian economies have vowed retaliation, while others like Vietnam are cutting tariffs to maintain favorable trade terms with Washington.
Meanwhile, major Asian exporters such as China, Japan, and South Korea have accelerated talks to create new regional trade agreements. Mexico has revised down its 2025 growth forecast, citing U.S. trade pressure.
Trump, who has long pledged to restore U.S. manufacturing, insists that tariffs will encourage companies to relocate production back to American soil. On Wednesday, he reiterated that message in a capital-letter post on Truth Social: “THIS IS LIBERATION DAY IN AMERICA!”
While global reactions are mixed, Indonesia’s strategy is clear: protect short-term stability while capturing long-term gains. By enhancing its role as a neutral, trade-friendly economy in an increasingly fragmented global order, Indonesia may yet emerge as one of the few winners from the new wave of protectionism.