Indonesia to Reopen Trade Talks with U.S. After 32% Tariff Hike
Main Takeaways
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JAKARTA, Investortrust.id — Indonesia will seek new trade talks with the United States after Washington imposed a 32% reciprocal import tariff, a move that threatens the competitiveness of key Indonesian exports and could trigger layoffs in labor-intensive sectors.
Coordinating Minister for Economic Affairs Airlangga Hartarto is scheduled to arrive in the U.S. on Tuesday, July 8, after attending the BRICS Summit in Rio de Janeiro. He is expected to meet with U.S. officials to address President Donald Trump’s newly announced trade policy targeting Indonesia.
“Minister Airlangga is set to hold discussions with U.S. government representatives on President Trump’s recent decision,” said Haryo Limanseto, spokesperson for the Coordinating Ministry, on Tuesday.
Limanseto noted that Indonesia still sees room to respond diplomatically to the U.S. move. “The government will maximize any available opportunity to safeguard national interests going forward,” he said.
Deputy Trade Minister Dyah Roro Esti Widya also said negotiations remain open with the U.S., though she declined to elaborate on the government's formal stance.
“This issue is still under discussion,” Roro told reporters at the Center for Export and Trade Services Human Resource Development in West Jakarta.
On Monday, Finance Minister Sri Mulyani Indrawati confirmed that Indonesia is closely monitoring the evolving tariff policy amid the preparation of the 2026 state budget. She described the U.S. tariff stance as “dynamic.”
Calls for Structural Reform and Strategic Realignment
Business leaders and economists urged the Indonesian government to use the moment as a catalyst for deeper structural reform and reduced reliance on external markets.
Shinta W. Kamdani, Chairwoman of the Indonesian Employers Association (Apindo), said the tariff shock should drive Indonesia to fast-track deregulation and trade reform. Apindo, which is involved in shaping Indonesia’s tariff negotiation strategy, is pushing for a cross-sectoral regulatory overhaul under a unified national approach.
“This is a collective effort that must be carried out in the spirit of Indonesia Incorporated, uniting government, businesses, and stakeholders,” Shinta said.
Economist Syafrudin Karimi of Andalas University in West Sumatra warned that Trump’s tariff decision would weaken Indonesia’s export base and strain bilateral trade relations. He highlighted the vulnerability of sectors like textiles, footwear, electronics, and rubber—cornerstones of Indonesia’s non-oil and gas exports.
“These industries are now at risk of shrinking margins, reduced output, and halted shipments,” Karimi said. “This will erode foreign exchange earnings and increase the likelihood of mass layoffs in labor-intensive industries.”
Karimi warned that prolonged export pressure could weigh heavily on economic growth. “Without sufficient bargaining power, our dependence on global markets becomes a liability in the face of unfair external pressure,” he added.
He characterized Trump’s tariff policy as “a form of intimidation” rather than a fair or mutually beneficial trade framework. “Trump is not interested in free trade or even fair trade. What he wants is submissive trade,” Karimi argued.
Rather than prolonging negotiations, Karimi recommended that Indonesia pivot to proposing a zero-tariff corridor—a mutual tariff-free agreement between the two countries.
“Negotiating under Trump’s terms is a waste of time,” he said. “Let’s finalize a mutual zero-tariff framework with the U.S. and move forward.”