Indonesia Seeks Tariff Relief in Talks with U.S., May Ease Local Content Rules

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JAKARTA, investortrust.id – The Indonesian government has confirmed it will open negotiations with the United States following Washington's decision to impose a 32 percent reciprocal tariff on Indonesian goods starting Wednesday, April 9. As part of its counterproposal, Indonesia is prepared to ease certain industrial policy requirements, including domestic content rules.

One of the main concessions being discussed is the relaxation of local content requirements in the information and communications technology (ICT) sector, particularly for products originating from the United States.

This was announced by Deputy Minister of Industry Faisol Riza after a high-level meeting with Coordinating Minister for Economic Affairs Airlangga Hartarto and representatives of various business associations.

“That’s one of the proposals the Indonesian government is considering,” said Faisol at the Ministry for Economic Affairs office in Central Jakarta on Monday, April 7.

While specific details on how much flexibility will be granted remain under discussion, Faisol said that adjustments to current regulations are inevitable. "There will definitely be some adjustments,” he noted, without elaborating further.

Fiscal Buffer for Industry Also in the Works

Head of the Fiscal Policy Agency Febrio Kacaribu confirmed that the government is also preparing a fiscal buffer strategy to support domestic industries affected by the U.S. tariff hike.

“We will absolutely prepare for this,” said Febrio after attending a meeting at the Coordinating Ministry for Economic Affairs office in Jakarta on Monday, April 7.

Febrio added that consultations had taken place with various industry associations. The discussion centered on the business community’s ability to navigate the growing trade tensions and what fiscal tools could support them.

“Our business leaders already have strategies in place and have been consulting with the government,” he explained.

According to Febrio, the three sectors most impacted by the 32 percent U.S. tariff are electronics, textiles and textile products, and footwear. Input from businesses in these sectors will form a core part of the negotiation strategy led by Airlangga Hartarto.

To ensure a comprehensive response, the negotiation team will also include Foreign Minister Sugiono and Finance Minister Sri Mulyani Indrawati. Sri Mulyani is scheduled to join the delegation while attending the upcoming IMF and World Bank Spring Meetings next week.

Lower Wheat Tariff Also Under Review

Beyond local content policy, the Indonesian government is also reassessing its import tariffs on key U.S. commodities. Coordinating Minister Airlangga Hartarto stated that current Indonesian tariffs on American imports are already relatively low—5 percent for wheat and zero percent for soybeans.

The government is now considering reducing the wheat import duty as part of its goodwill gesture to de-escalate the trade tension and promote reciprocal trade benefits.

Negotiations with U.S. counterparts are expected to take place before Thursday, April 17, within one week after the U.S. tariff enforcement date.