UNAIR NEWS – The United States has officially announced a flat 32 percent tariff on all Indonesian exports entering the American market. The policy was conveyed directly by President Donald Trump to President Prabowo Subianto through an open letter that went viral in early July 2025. The tariff is scheduled to take effect on August 1, 2025.
In response, Prof. Dr. Rossanto Dwi Handoyo, a senior economist at Universitas Airlangga’s Faculty of Economics and Business (FEB), said the decision is a clear indication that the U.S. is reverting to protectionist trade practices. On a broader level, he argued the move reflects a setback for the global trade system, which has long been shaped by ideals of liberalization and economic efficiency.
“It’s like returning to the mercantilist era, where trade is seen as a zero-sum game—one country’s gain through exports is another’s loss through imports,” he said.
Economic diplomacy called into question
Prof. Handoyo also criticized Indonesia’s economic diplomacy, describing it as too soft. He noted that Indonesia has long been seen as a “good boy” by the U.S. for its compliance and democratic track record, which previously earned it trade advantages such as access to the Generalized System of Preferences (GSP). However, those benefits have now been revoked after the U.S. reclassified Indonesia as a developed nation under the OECD framework.
In this situation, he said Indonesia’s trade diplomacy appears more submissive than strategic. The Indonesian government had even expressed willingness to purchase U.S. products—such as Boeing aircraft, agricultural goods, and energy resources—in the hope that the tariffs would be reconsidered.
Export diversification a pressing need
Reflecting on the structure of Indonesia’s exports, Prof. Handoyo pointed out that the country remains heavily dependent on a small number of major trading partners like the United States. Currently, 60 to 70 percent of Indonesia’s exports are concentrated in just 10 to 15 countries.
He also emphasized the need to shift away from reliance on natural resource-based commodities and low-cost labor. The government, he said, must promote value-added industries driven by innovation and technology.
“We need to move toward producing semi high-tech and high-tech goods. It’s no longer sustainable to depend on raw materials or cheap labor,” he explained.
In closing, he stressed the importance of developing a more resilient and self-reliant framework for economic diplomacy. In addition to diversifying export products, he also highlighted the need to grow the domestic services sector—particularly tourism—as part of Indonesia’s long-term economic strategy.
Author: Rosali Elvira Nurdiansyarani
Editor : Khefti Al Mawalia
