The world is now entering a new era of trade tariff wars after US President Donald Trump set new import tariffs for 68 countries that will take effect on August 7, 2025. Indonesia's exports to Uncle Sam's country will be subject to a 19% tariff. What are Indonesia's challenges and opportunities?
The decision to set tariffs was made by Trump ahead of the deadline for the implementation of tariffs which was previously decided to take effect on August 1. On Thursday (31/7/2025) evening local time or Friday morning WIB, the White House stated, Trump had signed an executive order containing tariff changes to 68 countries and the European Union by 10%-41%.
The tariffs will take effect on August 7, 2025. Countries not on the list will be subject to a 10 percent tariff.
This is the second time Trump has declared a tariff war. The first time, Trump tinkered with the amount of trade tariffs during his first administration, namely the 2017-2021 period. No wonder, today's condition is often labeled Trump Tariff War 2.0.
Fithra Faisal Hastiadi, Spokesperson for the Presidential Communications Office for Indonesian Economic Affairs, said that the tariff is a challenge but also an opportunity.
"In every difficulty there is an opportunity," said Fithra.
Fithra mentioned that Trump 2.0 is not only about threats, but also about opportunities - if we are observant. For example, the US plan to reduce soybean meal tariffs to 0% could reduce feed prices, helping chicken farmers in Indonesia.
"There are loopholes in every policy. The key is to understand the supply chain," said Fithra.
For example, if the US hits Chinese products with high tariffs, Indonesia has the opportunity to fill a niche market, especially products that do not directly compete with the US. However, this opportunity cannot be taken halfway. We need to know details such as what products are subject to tariffs and the extent of the potential substitution of these products.
Paramadina University economist Wijayanto Samirin views the 19% figure for Indonesia as a good start. "Very good beginning, just how to detail it. There are several small negotiations that have the potential to make certain products get a 0 percent tariff," he explained.
However, the next key is in the details of the negotiation. Namely, by reading which products can be negotiated further, which sectors are the most sensitive, and how to maintain competitiveness compared to neighboring countries.
"Most importantly, our rate is competitive against China, Vietnam, Thailand, Malaysia, India. As long as that is maintained, we can play around," said Wijayanto.
For him, the important thing is not to panic, but also not to be passive. Because in the end, Trump only needs the "America wins" narrative in front of his voters, while technical details are often negotiated behind the table.
Meanwhile, Secretary General of the International Economic Association (IEA) Lili Yan Ing warned that Indonesia must be vigilant. The 19 percent tariff that has been obtained can become uncompetitive if export competitors succeed in getting lower tariffs.
"Don't be too complacent. Indonesia should stand with all ASEAN countries as a regional bloc, so that it has higher bargaining power," he said.
He also reminded that Indonesia's argument should not stop attrade in goods alone. There are other important aspects such as trade in services, investment, and the surplus that the US has enjoyed from services and investment in ASEAN.
"ASEAN has actually contributed hundreds of trillions of US dollars to US companies. This should be raised in our arguments," Lili added.
For him, Trump's announcement is like a political pressure maneuver, and Indonesia needs to respond rationally, not emotionally. Most importantly: urging clarity in black and white, not just promises on a podium.
Export performance
In the midst of Trump's tariff decision, the Central Bureau of Statistics (BPS) announced the latest data on Indonesia's export performance. Indonesia's total exports in January-June 2025 reached USD $135.41 billion, an increase of 11.29% compared to the same period last year or year on year (YoY).
The increase in exports was mostly supported by non-oil and gas exports which grew 12.61% YoY. Meanwhile, oil and gas exports decreased by 9.85% YoY.
Non-oil and gas export growth was supported by the growth in export performance of animal/vegetable fats and oils commodities (palm products) 22.05% YoY. The increase in this commodity is a lever for overall non-oil and gas export performance because it is the largest contributor, with 12.37% of non-oil and gas exports.
As for the destination countries, Indonesia's largest export destination is to China with a portion of up to 22.83% of total exports. Meanwhile, the US is in second place with a share of 11.52% of total exports.
Meanwhile, in terms of imports, Indonesia's total imports in January-June 2025 reached USD 115.94 billion, up 5.25% YoY. However, because export performance was still greater than imports, Indonesia still recorded a trade balance surplus of USD $19.48 billion.
"This continues the trend of trade balance surplus for 62 consecutive months," said BPS Deputy for Distribution and Services Statistics Pudji Ismartini.
Executive Director of the Communication Department of Bank Indonesia (BI) Ramdan Denny Prakoso said that BI views this trade balance surplus as positive to further support the external resilience of the Indonesian economy.
"Going forward, BI will continue to strengthen policy synergies with the Government and other authorities to improve external resilience and support sustainable national economic growth," he said.
The positive performance of non-oil and gas exports was mainly supported by natural resource-based exports such as animal/vegetable fats and oils as well as exports of manufactured products such as various chemical products. Based on destination countries, non-oil and gas exports to China, the United States, and India remained the main contributors to Indonesia's exports.
