Halim Rusli remembers well when US President Donald Trump announced the implementation of reciprocal tariffs in April 2025. According to him, the policy shook the market. "The tariffs made the market rowdy, many buyers in America held back purchases because it directly affected their purchasing power," he said when contacted on Thursday (2/10/2025).
The tariff policy is part of America's new trade strategy. The US government imposed a universal base tariff of 10% on all countries, and then added higher reciprocal tariffs for certain countries. Indonesia is also subject to a tariff of 19%, while Vietnam is burdened with up to 46 percent and China faces additional sectoral tariffs.
As Chief Executive Officer of PT Integra Indocabinet, America is no stranger to Halim. The company, which was established in 1989, initially produced CD and plastic racks, before venturing into furniture and derivative products. For more than three decades, the American market has remained Integra's main focus.
Halim said 80% of Integra's products still land in America. "In America there is Target. They have 2000 branches. That's just from one store, not other stores," he said. In contrast, for other countries, Integra mostly only serves stores with around 100 branches.
After the new tariffs took effect, the value of Integra's exports to America began to erode, especially in mainstay products such as indoor furniture that had been selling well in Uncle Sam's country.
"My estimate is down about 30%," he said.
BPS data recorded a similar trend, with Indonesia's non-oil and gas exports to the US in August falling 12.39% on a monthly basis. In July, Indonesia's non-oil and gas exports to the US amounted to US$3.10 billion, falling to US$2.72 billion in August.
This condition prompted Integra to look for a new strategy. The company began working on alternative products such as outdoor furniture, flooring, and building complements, as well as targeting other markets so as not to fully depend on America. According to Halim, this diversification step has actually been taken since 2024, long before the tariffs were imposed, as a business instinct in the midst of globalization.
For Halim, Trump's tariffs are a momentum to get out of the comfort zone. However, trying out markets outside America cannot be done immediately. Integra must aggressively introduce itself through various events, rebuild trade networks, and strengthen production lines.
"Now we want to make a comeback to Europe. In the past, the portion there was small because we were too comfortable in America," he said.
Similar conditions were also experienced by Glenn Candranegara, owner of PT Katwara, a furniture company from Surabaya. He admitted that his exports to America were immediately depressed after the new tariff policy took effect.
"There was a request for burden sharing with American buyers , and the decline was up to 50%," he said. From this decline, the lost export value reached around Rp100 billion.
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To offset losses from the American market, Glenn began to shift some of his exports to Europe. According to him, the design styles and types of wood in demand in the European market are similar to the American market, so the shift felt more natural. However, so far only about 20% of Katwara's total exports have made it to the European market.
The effort to penetrate the European market was not without its challenges. Glenn recognized that the American market was still much larger in terms of quantity, so he needed to spend extra effort on product research and development. Outdoor and garden products were the main lines developed specifically for Europe, although this process required detailed attention at every stage.
Product customization also demands additional costs. Glenn said that at least Rp100 million was allocated to fulfill compliance and certification requirements that apply in the European Union. Beyond that, product prices also had to be made more aggressive in order to compete, with price reductions of between 10 and 30%.
Despite taking various steps, Glenn admits that the new market has not been able to fully cover the decline from America. He believes that the global market itself is in an unstable condition.
For this reason, Katwara focuses on efficiency and modernization of facilities so that the company can remain flexible in seeking new opportunities, while remaining innovative in producing products.
Stories from upstream textiles
In the upstream textile sector, the Chairman of the Indonesian Fiber & Filament Yarn Manufacturers Association (APSyFI), Redma Gita Wirawasta, sees the impact of tariffs more visibly. From the reports of APSyFI members, exports to America for fiber, filament yarn, PET, and rayon have practically stopped since the new policy took effect.
He said one viscose rayon producer even closed three of its five production lines due to the shaky market. "For PET, fiber, and filament, there are no exports to America at all," Redma said.
The association is now pushing to redirect the flow of goods to markets that are still compatible in terms of specifications. For PET, doors are starting to open to India, while fibers and filaments are directed to the EU and Turkey, with limited opportunities to Japan.
However, Redma reminded that the character of products exported to America, Europe and Japan tends to be specialized and upper middle class, so it is not easy to shift to markets with lower middle class demand.
In the midst of intensifying competition as many countries also shift their exports away from the US, Redma offers a closer priority: strengthening the domestic market while limiting the flood of imports. According to him, domestic absorption can be a cushion when export markets are dragging and other countries are increasingly protectionist. "If you want to survive, the domestic market should be controlled," he said.
US remains an important market
Researcher at the CSIS (Center for Strategic and International Studies) Economic Department Deni Friawan, assessed that the downward trend in exports to America in August could still be offset by an increase to a number of other countries. Nominally, exports to China were almost double those to America.
However, he cautioned that this condition should not make Indonesia complacent. "In fact, in terms of margin and stability, the US market remains important," Deni said.
According to him, market diversification is not only about volume, but also quality and sustainability of trade relations. Efforts to maintain exports to America must continue, for example by fixing problems that have arisen such as the case of tainted shrimp.
At the same time, exports to other countries must be supported by increasing the added value of products, strengthening bilateral and regional trade agreements, and being prepared to face geopolitical risks and growing protectionism.
Furthermore, Deni emphasized the need for a long-term strategy to make diversification truly sustainable. Economic diplomacy needs to be expanded, not only through cooperation in ASEAN, RCEP, or I-EU CEPA, but also to Africa, the Middle East, and Latin America which have great potential. Domestically, the quality standards of export products must be improved, especially in terms of sustainability, food safety, and international certification.
Deni also highlighted the importance of building a supporting ecosystem to make Indonesia's export competitiveness stronger. This includes efficient logistics, inclusive export financing, and encouragement of digital services exports such as technology, animation, and education.
For him, these steps will ensure that market diversification is not just about finding new buyers, but also increasing the competitiveness of Indonesian products in the global arena.
Ministry of Industry Spokesperson Febri Hendri said, to boost export performance, businesses in bonded zones can try to shift their markets abroad instead of domestically.
This is because businesses in bonded zones have benefited by obtaining a number of tax relief incentives for the purchase of imported raw materials. This means that the production costs of factories in bonded zones are much more efficient so that products sold to the export market can also get more competitive prices.
Moreover, Febri continued, as stated by the Minister of Trade Budi Santoso, the production utility of entrepreneurs in bonded zones ranges from 60-70%. This means that there is still space that can be maximized in their business activities.
In addition, the domestic market is also full and saturated with a flood of imports. "Don't go back to the domestic market. Making this domestic market even narrower. Let's expand outside," said Febri, Tuesday (30/9/2025).
