Jakarta. Indonesia\u2019s reciprocal tariff policy with the United States\nstill poses risks to economic growth in 2026, although it also opens\nopportunities for export diversification and foreign direct investment\n(FDI), economists at Permata Bank said during the Indonesia Economic\nOutlook 2026.<\/p>\n
Chief Economist Permata Bank Josua Pardede said the tariff\narrangement could restrain growth amid a global slowdown. The main\ntransmission channels would come from weaker external demand, supply\nchain disruptions and heightened uncertainty, which could dampen\ninvestment realisation and trade flows.<\/p>\n
\u201cThe biggest risks remain external demand and supply chain\ndisruption. Rising uncertainty could hold back FDI realisation and trade\nflows,\u201d Josua said.<\/p>\n
However, he noted the policy could generate upside if used as a\nnegotiation tool to expand market access. Indonesia has advanced trade\nagreements such as the EU-CEPA and Canada-CEPA, which may strengthen\ntrade certainty, though their benefits remain limited to certain\ncommodities and subsectors.<\/p>\n
On potential US FDI into Indonesia\u2019s manufacturing and logistics\nsectors, Josua highlighted that investment would remain conditional.\nPositive inflows would depend on broader reforms, including regulatory\ncertainty, streamlined licensing, targeted incentives, adequate energy\nsupply, competitive industrial estates and efficient logistics\nconnectivity.<\/p>\n
\u201cWithout those prerequisites, even with tariff negotiations, US\ninvestment will remain conditional,\u201d he said.<\/p>\n
Josua also highlighted the need to diversify export markets to reduce\nreliance on a single destination. Although the EU-CEPA takes effect in\n2027, Indonesia can optimise other partnerships, including BRICS\neconomies. Still, diversification must be backed by stronger\ncompetitiveness and higher value-added through industrialisation to\navoid merely shifting markets without productivity gains.<\/p>\n
Head of Industry and Regional Research Permata Bank Adjie Harisandi\nsaid the newly signed 19% US reciprocal tariff, alongside a $38.4\nbillion investment commitment in strategic sectors, requires closer\nscrutiny as it reportedly covers around 1,800 products.<\/p>\n
For labour-intensive industries such as textiles, garments and\nfootwear, Adjie pointed to indications of a 0% tariff under a tariff\nrate quota scheme. Exports within a set quota would face zero tariffs,\nwhile volumes above it would incur duties.<\/p>\n
\u201cIf Indonesia receives special treatment compared to competitors such\nas Vietnam or Bangladesh, this could significantly boost export\nperformance in manufacturing-based sectors,\u201d he said.<\/p>\n
Adjie noted that Indonesia\u2019s export dependence on China has risen\nover the past two decades, exceeding 20% in 2024, while exports to the\nUS have remained relatively flat. Preferential access to the US could\ntherefore strengthen diversification. Exports to China are dominated by\nraw commodities such as coal, crude palm oil and nickel, whereas exports\nto the US largely consist of manufactured goods including electronics,\nfootwear and textiles.<\/p>\n
Head of Macroeconomic and Financial Market Research Permata Bank\nFaisal Rachman emphasised the need to compare Indonesia\u2019s agreement with\nthose of other countries.<\/p>\n
\u201cIf it is not exclusive, the impact may not be significant. But if\nIndonesia receives preferential treatment compared to countries with\nsimilar export structures, the opportunity could be substantial,\u201d Faisal\nsaid.<\/p>\n
He added that Indonesia\u2019s trade balance is likely to remain in\nsurplus, though narrower. While the 19% tariff applies broadly, a 0%\nrate is granted for certain goods not produced domestically and key\nexport products, with textile exports subject to quota limits.<\/p>\n
Faisal also warned of potential fiscal implications and geopolitical\nrisks, particularly in the Middle East, which could affect energy prices\nand exchange rates.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/risk-or-reward-economists-weigh-impact-of-us-reciprocal-tariffs-on-indonesia-1771666604", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }