Entering the implementation of US export tariffs, Executive Director of the Indonesian Footwear Association (Aprisindo) Yoseph Billie Dosiwoda admitted that he could not estimate how much impact it would have on the domestic shoe industry. What is clear, he said, will greatly burden the industry in this sector.
"It will definitely be hard," he said. Aprisindo is currently still waiting for further information from exporters after the tariff is officially implemented.
Billie admitted that he is collecting information from members who export, especially to the United States, regarding the impact of this tariff imposition. As a labor-intensive industry that absorbs around 960,000 direct workers and involves 1.3 million people in its supporting ecosystem, the sustainability of this sector is greatly affected by foreign trade tariffs.
In 2024, Indonesia's footwear exports to the United States alone reached US$2.39 billion.
To anticipate the impact of this tariff, Aprisindo also compares Indonesia's tariff position with competing countries. "But if we are higher than Vietnam, which is lower, it is useless. We will still lose. The point is, our tariff must be lower than competing countries, such as Vietnam, Cambodia, Taiwan, even China and Hong Kong," Billie said.
He added that international buyers will consider product quality, not just tariffs. "Indonesian workers have the advantage of quality in making footwear painstakingly and neatly," he said.
According to him, moderate entry tariffs with high quality provide space for Indonesia to seize market opportunities. Aprisindo hopes that this tariff policy will encourage the acceleration of domestic structural reforms.
Billie emphasized the need for deregulation across ministries and institutions in a fast and coordinated manner. He mentioned the importance of ease in licensing, EIA, SNI, renewable energy access, export-import, and regulatory certainty related to minimum wage.
We need incentives from the government. Discounts on electricity, tax breaks, and access to affordable renewable energy such as solar panels.
In addition, incentives are also needed if the 19% tariff applies to Indonesia. "We need incentive support from the government. Discounts on electricity, tax breaks, and access to renewable energy - such as affordable solar panels at the beginning. That can help cover the production burden caused by this tariff," Billie said.
"If other countries can produce more cheaply, buyers will definitely run there. We need a strategy to keep our production costs competitive," he added.
Negotiations continue
On August 7, 2025, the United States government officially set an import tariff of 19% for products from Indonesia. Trade Minister Budi Santoso said that although the tariff has taken effect, the government is still trying to persuade the United States to provide smaller tariffs for a number of Indonesian commodities that are not produced by the country.
"We are trying to get 0 percent," he said. He stated that the government targets the negotiations to be completed before September 1, 2025.
Coordinating Minister for Economic Affairs Airlangga Hartarto stated that the 19% tariff imposed on Indonesia is one of the lowest in Southeast Asia, outside Singapore which gets a 10% tariff.
Thus, Indonesia still has a great opportunity to compete in the US export market, especially compared to India, which is the main competitor in the textile and textile products (TPT) sector. India is subject to a 25% tariff by the US. "If the level of playing field is the same, it means that only competitiveness is improved and some of our commodities that the US does not produce are given lower tariffs," said Airlangga.
On the other hand, some Indonesian commodities also receive zero percent tariffs, such ascopper concentrate andcopper cathode. When announcing the imposition of tariffs for Indonesia at 19%, US President Donald Trump admitted that he was interested in buying copper from Indonesia because of its good quality.
However, the US offer did not immediately attract Indonesian copper producer PT Freeport Indonesia (PTFI). The company, whose majority stake is now controlled by the state, stated that it still prioritizes meeting the needs of the domestic market.
"The company's main priority remains to fulfill the needs of the domestic industry," Freeport Indonesia VP Corporate Communications Katri Krisnati was quoted as saying by Antara.
In addition to the domestic market, Katri also explained that Freeport Indonesia's products are currently marketed in Asia, not the United States. Freeport Indonesia President Director Tony Wenas stated that currently the company's largest market for copper exports is Japan.
In fact, even though it will not be subject to tariffs, Freeport has not yet taken the initiative to shift its market destination. "To move the market? If you go to America, it is far away, (it takes) 45 days of shipping. Meanwhile, to China it is only 7 days of shipment, and China consumes 50% of the copper in the world," Tony said.
Get a better deal
Chairman of the Indonesian Textile Association (API) Jemmy Kartiwa admitted that the reduction in reciprocal import tariffs, from 32% to 19%, indirectly increased the competitiveness of Indonesian textile and textile products (TPT) to the United States. In other words, Indonesian textile products are more competitive.
Moreover, the United States has been a strategic trading partner for textile export products for decades, with a market share of nearly 40%. Jemmy explained that clothing and accessories, both knitted and non-knitted, are the most popular textile export commodities in the United States.
So far, Indonesian textile products in the US market compete with Indian and Vietnamese products, but the tariffs imposed by the US on India and Vietnam are quite high compared to Indonesia.
Vietnam is subject to a 20% import tariff, while India is subject to a 50% import tariff; this momentum can be utilized by Indonesia by continuing to improve the quality of textile products so as to attract more US consumers. "Indonesia can be considered lucky, yes, to be able to get an import tariff of 19% compared to competitor tariffs," he told SUAR, August 6, 2025.
Although API also asked the government to continue to be aware of the surge in imported products from other countries entering Indonesia, it could be products from Vietnam and India. The government needs to continue to protect domestic entrepreneurs and limit incoming imported products.
Meanwhile, Chairman of the Indonesian Palm Oil Association (Gapki) Eddy Martono said that Indonesia's fate is quite good because the import tariff has been reduced from 32% to 19%. Gapki still hopes that the government will continue to negotiate with the US government to reduce the import tariff to 0%.
Based on GAPKI data in the last five years, Indonesia's palm oil exports to the United States have shown an increasing trend.
Based on Gapki data in the last five years, Indonesian palm oil exports to the United States have shown an increasing trend. In 2020, the export volume reached 1.5 million tons and increased to 2.5 million tons in 2023, although it declined slightly to 2.2 million tons in 2024. The export value of palm oil in 2024 reached US$2.9 billion, with Indonesia's market share in the US reaching 89%.
"Palm oil is the main ingredient of the food industry in America, such as margarine, which cannot be replaced by other vegetable oils," he told SUAR.
19% tariff keeps the pressure on
Chairman of the Indonesian Filament Fiber & Yarn Producers Association (APSyFI), Redma Gita, assessed that the tariff reduction from 32% to 19% imposed by the United States remains a new pressure for industry players. "Those who usually don't pay 19%, they will pay," he said.
Despite the reduction, the tariff still has an impact on the competitiveness of Indonesian products.
According to Redma, this decrease in competitiveness occurs because buyers have to bear additional tariffs. However, as many other countries are also affected, including those with higher tariffs, the level of competition has not changed drastically.
Under such conditions, according to him, attention needs to be directed at reducing the overall volume of American imports. "Because the cake is so small," he said.
When American imports fall, the market that Indonesia, China, India, and Vietnam usually compete for shrinks as well. Consumers in export destinations will pay more, potentially depressing demand.
If buyers are unable to buy in normal quantities due to tariffs, then they will reduce imports. Redma concludes, "overall, American imports will decrease."
Other factors: competitive dynamics
Regarding the impact of tariffs on the fiber and filament yarn industry, Chairman of the Indonesian Fiber & Filament Yarn Producers Association (APSyFI) Redma Gita could not confirm whether Indonesia's exports would automatically fall. He explained that everything depends on the dynamics of competition.
If competitor countries such as China and India are hit by higher tariffs, then Indonesia has the opportunity to take over the market niche they leave behind. "To what extent we can seize the market of competitor countries, that determines whether it can go up, can remain, or can go down," he said.
He illustrated that if China controls 60% of the market, then when the market shrinks and China's share drops, there will be empty space in the market. That space, according to Redma, becomes a bone of contention. Indonesia can enter to replace the empty space if it is able to move quickly and competitively.
Redma mapped that in the upstream sector, Indonesia's competitors in capturing the market left by China include Korea, Taiwan, Brazil and Turkey. While in the downstream sector, Indonesia will compete with Vietnam, Cambodia and Sri Lanka. The final outcome of Indonesia's exports to the US will largely depend on this competition.
Thus, Indonesia, said Redma, is faced with a complex situation. On the one hand, the potential for a decline in exports remains open. On the other hand, opportunities for growth also exist if the markets left by competitors can be filled.
The downstream sector is considered the most vulnerable because the value of exports to the US is very large. "It should be able to go up, anyway," he said, referring to the potential takeover of buyers who usually transact with China.
Citing data from the Central Statistics Agency (BPS), Redma said Indonesia's exports to the United States for downstream products in 2024 would reach around US$4.8 billion. Of that amount, around 60% came from garment or apparel products.
That value is equivalent to nearly US$3 billion. This sector, according to Redma, is the most critical area in the face of tariff policies.
Look for potential replacement markets
Exploring alternative markets is also a strategy that needs to be explored, although doing so is not easy. When China loses the US market due to high tariffs, they will also look for other markets. This creates the potential for direct clashes with Indonesia in new areas. "We have to compete with Chinese goods," he said.
Chinese goods are known to be cheaper. When competing in new markets, this price advantage becomes a challenge. Redma said the only market that can be relatively controlled is the domestic market. However, even within the country, Chinese goods remain a threat due to the absence of effective protection.
"They are overstocked. Because the US is subject to high tariffs, it is not impossible for them to shift their market to Indonesia," he said.
In the domestic market, most products are dominated by small and medium industries (SMEs). If cheap goods from outside enter without barriers, then SMEs will be directly affected. "This must be the government's concern," said Redma. He emphasized the importance of protection for domestic producers.
So far, the government has various regulations on import restrictions such as Permendag 8, 36, and the latest revision of Permendag 17. However, Redma believes that all of these regulations have not been effective. He said that in the last five years, legal imports have continued to increase. "The government has tools, but those tools kill the domestic industry," he said.
The import quota continues to rise, even though the utilization of local producers has fallen.
The Ministry of Industry as an institution that regulates import quotas is also considered not carrying out a protective function. Redma said that the import quota given continues to rise, even though the utilization of local producers has actually fallen.
The implications will again be felt by SMEs. Redma said, there will be those whose stock piles up, some will go bankrupt, and some will only be able to operate part of the machine. "There are five machines, but only two are running," he said.
For this reason, APSyFI believes that protection policies must be seriously implemented, such as anti-dumping and safeguard. These two instruments allow the government to impose additional import duties on imported goods sold below market prices. "Whatever the tools are, if the government is not serious, it won't work," said Redma.
In addition to protection, Redma believes that the government needs to provide incentives so that the industry can compete with imported products. Effective incentives, according to him, are those that directly reduce production costs, such as the elimination of VAT, electricity subsidies, gas, and interest. He believes that the income tax cut is not enough to impact the industry. The government also needs to calculate the amount of realistic incentives so that competitiveness is maintained.
Inevitably the economy weakens
Deputy Director of the Institute for Development of Economics and Finance (Indef) Eko Listiyanto said the implementation of 19% tariffs from the United States on Indonesian products risks reducing economic growth. Based on modeling simulations conducted by the Indef team, the impact of the tariff policy is not positive. "Economic growth will fall according to the simulation," Eko said.
According to him, the additional burden due to tariffs and the decline in purchasing power of the American people are the main causes of this. Indonesian products will become more expensive in the market, resulting in lower demand. This has a direct effect on export performance and national economic achievements.
Eko said that the increase in exports in recent times is more due to the front loading phenomenon. Businesses in America are trying to secure stock before tariffs are imposed. However, in the medium term, the export trend will actually decline as demand shrinks.
The Indef study used a 19% tariff scenario. Eko said the results were different from the National Economic Council's simulation, which stated that tariffs could increase growth by 0.5%. "I personally find it a bit strange if there is a conclusion that this tariff can increase growth," he said.
The labor-intensive industry sector, Eko said, is the most vulnerable. The footwear and garment industries are examples of sectors that are at risk of declining due to reduced demand from America. This decline will be more pronounced if economic conditions in Uncle Sam's country worsen.
According to Eko, the International Monetary Fund (IMF) expects the American economy to grow only 1.8% this year, down from 2.8% last year. With weak purchasing power, purchases of imported goods will be reduced. At the same time, Indonesia also faces pressure from fellow exporting countries in Asia.
Malaysia, for example, has similar export tariffs for palm products and can take over part of the market. The same thing happens with Vietnam, which is only 1% different from Indonesia's tariff. The difference is considered insufficient to shift Vietnam's dominance in the American market.
In the short term, the government is advised to focus on fiscal incentives to maintain competitiveness.
In the short term, the government is advised to focus on fiscal incentives to maintain competitiveness. Cutting production costs through electricity discounts or tax breaks is considered more realistic than providing direct subsidies. "So even though they will be subject to tariffs, the production costs here can be reduced," said Eko.
Eko said, this strategy has been applied by China to outsmart tariffs from the United States. Instead of lowering tariffs, China lowered the production burden for the export industry. That way, export prices remain competitive without having to violate trade provisions.
Mukhlison Sri Widodo, Harits Naufal Arrazie and Ridho Sukra
Exposed to Double-Edged Sword
Micro, small and medium enterprises ( UMKM), which account for more than 60% of Indonesia's Gross Domestic Product (GDP), need to move quickly in order to anticipate the impact of tariffs imposed on Indonesia by the United States.
UMKM products such as handicrafts, processed foods, and textiles become more expensive in the US market. American consumers may switch to products from other countries with lower tariffs.
Therefore, adapting too late increases the risk of failure, whereas a quick and strategic move can pave the way for broader growth.
Chairman of the Indonesian Furniture and Handicraft Industry Association (Himki) Abdul Sobur said that although Indonesia's import tariff is smaller than other countries, the 19% import tariff is still heavy for UMKM players.
" UMKM players are very sensitive to changes in costs and the government must be concerned about their interests," he told Suar. He hopes that the government will continue to negotiate for the US to remove import tariffs for Indonesia.
Data from the Indonesian Furniture and Handicraft Industry Association (HIMKI) shows that the value of Indonesian furniture exports (HS 9401-9403) reached US$2.5 billion in 2022 and then fell to US$1.9 billion in 2023.
Economic Observer and Vice Chairman of the LPS Board of Commissioners 2023-2025 Lana Soelistianingsih explained that the reciprocal import tariff of 19% is like a double-edged sword, which can have an impact on both negative and positive sides.
On the positive side, there are several industrial sectors that can be competitive, such as textile products, because Indonesia's import tariffs are lower. On the negative side, industry players, especially UMKM , can think twice about exporting. "The solution is that the government must be able to lobby the US so that import tariffs return to 0 percent," he said.
