Government Moves to Shield Labor-Intensive Exports as US Tariffs Threaten Key Sectors

Main Takeaways

● The Indonesian government is drafting a policy package to support labor-intensive sectors affected by the US’s 32% reciprocal tariff. ● The policy will address import licensing, tax services, customs procedures, and import quotas to ease business operations. ● A dedicated task force has been formed to manage potential layoffs stemming from the trade dispute. ● Indonesia and the United States aim to finalize a bilateral agreement within 60 days, covering trade, investment, critical minerals, and resilient supply chains.

JAKARTA, investortrust.id – The Indonesian government has begun preparing an economic policy package aimed at safeguarding labor-intensive industries from the effects of a 32% reciprocal tariff imposed by United States President Donald Trump. The package is expected to include import license reforms and streamlined business procedures via the country’s online submission system.

Speaking at a press conference in Washington DC on Thursday, or Friday, April 18, 2025, Jakarta time, Coordinating Minister for Economic Affairs Airlangga Hartarto said the policy measures under discussion include adjustments to import licensing rules, particularly those related to the Importer Identification Number, known locally as angka pengenal impor, and the Online Single Submission (OSS) system.

“This policy package is currently under discussion. Among the items being considered are import licenses, API, and online single submission,” Airlangga said.

He further stated that the government is also looking at adjustments to customs services and tax treatment for these industries. A critical component of the policy package will involve revisiting import quota regulations, which are often seen as a bottleneck for export-oriented businesses.

The former Minister of Industry under the Working Cabinet emphasized that the policy is being tailored to protect industries most vulnerable to the tariff hike, including garments, footwear, furniture, and fisheries.

Mari Elka Pangestu, Vice Chair of the National Economic Council, said the proposed package would include a comprehensive deregulation initiative, especially in sectors directly impacted by the Trump administration’s tariff regime. “In particular, we’re reviewing what can be done for labor-intensive industries and shrimp producers,” said Mari.

She added that the government has also formed a Task Force on Employment and Layoffs to manage the potential fallout from the ongoing trade tensions. However, she noted that concrete actions would depend on the outcome of negotiations between Indonesia and the US. “We are still in negotiations, and it’s uncertain what the result will be in the next 30 to 60 days,” she said.

The government has set a target to conclude the tariff negotiation process within 60 days. According to officials, both countries have agreed on the basic format for a bilateral agreement. Topics included in the ongoing negotiations cover trade partnerships, investment cooperation, critical mineral supply chains, and building a more resilient and reliable logistics network.