There is certainty, although it is not satisfactory. The US government on August 7, 2025, officially set an import tariff of 19% for products from Indonesia.

Trade Minister Budi Santoso said that although the agreement is already in 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. Budi said the government is targeting the negotiations to be completed before September 1, 2025. 

In terms of entrepreneurs and the industrial sector, government protection efforts are needed. Incentives as well as initiatives to open new markets are short-term solutions.

Industry sector expectations

• There is rapid and coordinated deregulation across ministries and agencies.
• It needs ease in licensing, EIA, SNI, access to renewable energy, export-import, and regulatory certainty regarding minimum wages.
• Immediate incentives from the government. Discounts on electricity, tax breaks, and access to renewable energy.
• It is necessary to be aware of the surge in imported products from other countries that are competitors and enter Indonesia, such as from Vietnam and India.
• 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.

Effects of tariffs on the Industrial sector

• Indonesian products will be more expensive in the market, especially in the US market.
• The market will become narrower, and competition, especially in the domestic sphere, will be more intense, while protection for domestic products is inadequate.
• UMKM products such as handicrafts, processed foods, and textiles could lose their market to competition.

Finding a way out of the tariff crush

• The government is targeting 20 of Indonesia's top export commodities to freely enter the European Union as part of the implementation of the IEU CEPA trade agreement.
• Apart from Europe, another potential market that is already open is BRICS as a potential region.

Obstacles to expanding the market for Indonesian products

• The transaction system still uses US$, through banks connected to the US. If fund transfers are detected as coming from Russia or Iran, accounts can be frozen.
• There are non-tariff barriers, namely the European Union Deforestation Regulation (EUDR). Europe still considers Indonesian CPO to be environmentally unfriendly.
• Indonesian export products must meet premium quality to be competitive.
• In BRICS, the main challenges are price and product homogeneity. If we want to compete in BRICS, we need to strengthen our pricing strategy and production cost efficiency.

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