UNAIR NEWS – President Donald Trump’s decision to impose a 19% tariff on Indonesian imports has dealt a modest yet stinging blow to several of the country’s export-driven industries. The finalized rate, though still substantial, is a significant reduction from the previously threatened 32%. According to Dr. Unggul Heriqbaldi, S.E., M.Ec., an international trade expert from Universitas Airlangga’s Faculty of Economics and Business (FEB), the lower tariff is the result of successful trade diplomacy that deserves recognition.
“From a diplomatic perspective, this is a meaningful outcome. We’ve managed to minimize potential damage that could have severely impacted labor-intensive sectors,” he said.
While a 19% tariff remains burdensome, it is far more manageable than the initial proposal and reflects Indonesia’s continued relevance in global supply chains.
Labor-intensive industries at risk
Sectors such as textiles, footwear, wooden furniture, and fisheries are particularly vulnerable. These industries operate on thin margins, making them more sensitive to cost increases. “The U.S. still accounts for roughly 20–25% of Indonesia’s footwear and apparel exports. If prices go up, buyers may shift their orders to competing countries like Vietnam or Bangladesh,” he explained.
Low value-added agricultural products like frozen shrimp, coconut, and processed palm oil are also likely to feel the impact, especially when coupled with logistical challenges and non-tariff barriers (NTBs) such as certification requirements.
Nevertheless, Indonesia still holds competitive advantages. Flexible manufacturing systems, reliable product quality, and on-time delivery continue to distinguish Indonesian producers. “The key is maintaining production efficiency and quickly adapting to market needs,” he added.
Outpacing ASEAN neighbors
Compared to other ASEAN nations, Indonesia stands in a relatively advantageous position. Vietnam now faces tariffs as high as 46%, Thailand 36%, and Malaysia 25%, while Indonesia’s rate has been reduced to 19%. “This gives Indonesian producers a strategic opening to offer themselves as alternatives to global buyers moving away from Vietnam,” he noted.
This shift presents a promising trade opportunity—not just to maintain current export volumes, but to capture additional market share from regional competitors.
Three strategic opportunities
Dr. Heriqbaldi identified three pathways Indonesia could pursue: redirecting global supply chains toward Indonesia, strengthening bilateral trade diplomacy, and reforming domestic logistics infrastructure.
“This tariff hike isn’t a warning sign of crisis—it’s a signal for us to boost efficiency and seize emerging opportunities,” he concluded.
While global markets may be tightening, Indonesia continues to chart a steady course forward.
Author: Sintya Alfafa
Editor: Ragil Kukuh Imanto
