UNAIR NEWS – U.S. President Donald Trump is once again in the global spotlight following his decision to raise import tariffs on several countries, including Indonesia, which now faces a steep 32 percent levy. Responding to the development, Prof. Rossanto Dwi Handoyo, SE, MSi, PhD, an international economics expert from Universitas Airlangga’s Faculty of Economics and Business (FEB), shared his analysis of the policy’s potential ramifications.
Prof. Handoyo noted that the tariff hike reflects the United States’ view that international trade remains skewed against American interests, particularly as U.S. exports are often subject to higher tariffs abroad. This imbalance, he explained, has led to persistent trade deficits for the U.S. in recent years.
“To illustrate, Indonesia posted a USD 31 billion trade surplus last year—half of which came from trade with the U.S. This stands in contrast to the American side, which continues to face high import duties,” he said. “The tariff increase is intended to improve the U.S. trade position and encourage consumption of domestic goods.”
Economic fallout
With the tariff increase in effect, Prof. Handoyo warned that Indonesian products in the U.S. market will become more expensive, leading to diminished competitiveness. This could erode Indonesia’s trade surplus and eventually tip the balance toward a deficit.
“Unless the government takes deliberate action, we risk losing that surplus. Our trade balance could fall into deficit, which would further suppress economic growth,” he stated. “Given that the economy is already projected to grow by only 4.9 percent, a drop in exports to the U.S.—a key trading partner—could drag down GDP.”
He further cautioned that reduced competitiveness may force the closure of export-oriented businesses, increase unemployment, and deter investment in key sectors tied to U.S. demand. Without effective intervention, these economic consequences could become more widespread.
“This trade conflict, coupled with a weakening rupiah and falling stock market, reveals a broader shift. The U.S. is repositioning itself to defend its domestic industries from foreign competition,” he continued. “Worsening inflation globally and the rupiah nearing a psychological threshold have made investors increasingly cautious about committing capital to Indonesia.”
Strategic path forward
To mitigate these risks, Prof. Handoyo emphasized the importance of diplomatic engagement. He recommended a negotiation-driven approach, highlighting the strategic importance of maintaining strong trade ties with the United States.
“It’s important to acknowledge how critical the U.S. is to Indonesia—not only as an export destination, but also as a key supplier in sectors like financial services and agriculture, particularly soybean imports,” he explained.
Penulis: Rifki Sunarsis Ari Adi
Editor: Khefti Al Mawalia
