Indonesia's Textile and Footwear Exports Gain Edge in U.S. Market With Lowest Tariffs in Asia

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JAKARTA, Investortrust.id – Indonesia has gained a significant trade advantage in the United States after securing a steep reduction in import duties for its products, with the new rate set at 19%, the lowest among Asian countries. The breakthrough is expected to boost exports of labor-intensive goods like textiles and footwear, industry leaders said on Monday, July 21, 2025.

The deal, which reduced the U.S. import tariff on Indonesian products from 32% to 19%, opens the door for stronger export performance, especially in the textile and footwear sectors. These industries have long dominated Indonesia’s manufacturing exports to the U.S.

The formal agreement was reached following a high-level negotiation between President Prabowo Subianto and U.S. President Donald Trump. Indonesia’s new tariff rate now undercuts those imposed on Vietnam (20%), Malaysia (25%), and the Philippines (20%).

Shinta Kamdani, Chairwoman of the Indonesian Employers Association (Apindo), emphasized that this preferential tariff could significantly improve Indonesia’s competitiveness in the U.S. market—if exporters seize the momentum.

"Now the question is whether we can fully capitalize on this advantage," Shinta said after a meeting at the Coordinating Ministry for Economic Affairs in Jakarta. “It's not only about keeping current contracts, but expanding our market share now that we have a lower tariff.”

Regional Advantage and Market Opportunities

Coordinating Minister for Economic Affairs Airlangga Hartarto confirmed the tariff outcome on Monday, noting that it was a result of direct negotiations between the two presidents. “The 19% figure is a final agreement and is now binding,” he said.

Indonesia’s new rate is not only the lowest among ASEAN countries, but also more favorable than rates granted to other major textile exporters. Bangladesh faces a 35% U.S. import tariff, while India is subject to 27%, Pakistan 29%, and Sri Lanka 30%.

“This puts Indonesia in a much stronger position compared to our competitors,” Airlangga said, adding that U.S. buyers had previously considered shifting orders to rival countries out of concern over tariff disparities.

Indonesia’s textile and footwear industries are particularly labor-intensive, employing over a million workers. According to Apindo, 61% of Indonesia’s textile exports currently go to the U.S., making tariff policy a critical factor in employment and factory sustainability.

Earlier this year, industry groups warned that over 1.2 million jobs could be at risk due to weakening export performance. The new tariff arrangement could help stabilize the sector and drive new investment.

Urging Exporters to Scale Up

Airlangga urged businesses to prepare for increased global demand by improving production capacity and competitiveness. “We can’t afford to waste this opportunity,” he said. “Low tariffs mean nothing if our exporters can’t scale up to meet demand.”

Shinta echoed this concern, pointing out that while the tariff cut was a significant win, it would not guarantee success unless manufacturers responded with agility and investment.

The government is also pushing for stronger coordination among ministries and industry associations to maximize the trade benefits and ensure that labor-intensive sectors benefit from the policy change.

Airlangga added that the government’s broader trade strategy also includes finalizing a trade deal with the European Union, which could further boost export momentum. “This is all part of our plan to achieve the economic growth target set in the state budget,” he said.

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