Indonesia Hit with 10% Additional US Tariff, Government Prepares Strategic Response

The Indonesian government has responded to the latest policy from the United States Trade Representative (USTR) regarding new reciprocal tariffs. Indonesia has been subjected to an additional 10% tariff by the United States. The government noted that the USTR acknowledged Indonesia as one of the countries actively committed to preventing and eradicating forced labour practices in the global supply chain. Indonesia has also participated actively in the Section 301 investigation process, which covers two issues: excess capacity in the manufacturing sector and the prohibition of imports of goods produced by forced labour. This participation included submitting written submissions, attending public hearings, and engaging in intergovernmental consultations. The USTR established the tariffs based on the results of the Section 301 investigation of the Trade Act of 1974 against 60 countries/economies. Indonesia is among the nations subjected to the additional 10% tariff, alongside 16 other countries and regions such as Malaysia, India, Mexico, Canada, and the United Kingdom. The government is also observing the USTR’s determination regarding product exemptions for certain Indonesian goods. According to information from the US side, the results of the investigation related to the excess capacity issue will be published soon. The government is awaiting the official announcement and hopes the tariffs will be favourable for Indonesia, and that products previously exempted through signed agreements will be accommodated. To maintain export competitiveness, the government is focusing on two main steps: simplifying domestic import regulations for raw materials to reduce production costs, and optimising existing trade agreements such as IA-CEPA, IK-CEPA, and RCEP, while aggressively opening new markets as alternatives to the US.