Indonesia Subject to U.S. Reciprocal Tariff, Government Open to Negotiation

JAKARTA – The Indonesian government is set to enter negotiations with the United States following confirmation that Indonesia has been included among the countries subjected to a 32% reciprocal tariff.

According to Kontan.co.id, the imposition of the reciprocal tariff is expected to impact several industries, prompting Indonesia to urge the U.S. to reduce its reciprocal tariff rate on Indonesian products.

To that end, Indonesia is offering to increase imports of U.S. wheat, cotton, and oil and gas products, including through fiscal and non-fiscal incentives.

Fiscal Incentives

The fiscal incentives on offer include reductions in import duties, import Income Tax Article (ITA), and import Value Added Tax (VAT). In addition, the government plans to streamline regulations that currently pose obstacles.

Aside from Indonesia, U.S. President Donald Trump has also imposed reciprocal tariffs on several other countries, including China, the European Union, and several Southeast Asian nations such as Vietnam, Thailand, Malaysia, Cambodia, and the Philippines.

Expanding Export Markets

Meanwhile, Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized that, in addition to responding to U.S. demands, Indonesia must also focus on expanding its export markets, particularly to the European Union, which remains one of Indonesia's largest markets after China and the U.S.

Airlangga noted that 83% of the global economy comes from countries outside the U.S., while the U.S. only accounts for 13% of the global economy. (ASP/KEN)