Indonesia Opens 99 Percent US Tariffs; Economists View Strategy as Protecting Export Access
SURABAYA — Indonesia has officially signed the Agreement on Reciprocal Tariff (ART) by opening approximately 99 percent of tariffs on goods originating from the United States. This policy is assessed as a strategic step to maintain access to Indonesia’s export markets, although it is not considered to fully reflect an equitable trading relationship.
Unggul Heriqbaldi, Lecturer in International Economics at Airlangga University, explained that from an international economics perspective, trade agreements are not always symmetrical because they are heavily influenced by the economic strength and bargaining position of each country.
According to him, the United States possesses considerably stronger bargaining power given its large economy size and the status of its domestic market as the primary export destination for many developing nations.
Unggul emphasised that in international trade practice, the principle of reciprocity does not necessarily mean identical tariff parity.
If Indonesia opens more than 99 percent of tariffs on US products whilst Indonesian products still face tariffs of up to 19 percent in the US market, technically the relationship remains asymmetrical.
This condition demonstrates that Indonesia’s primary focus in negotiations was likely maintaining stability of export access, rather than demanding direct tariff equality.
“However, of course, the government must ensure that these concessions are balanced with long-term strategic advantages, such as technology transfer, investment, or integration into global supply chains,” he explained.
He assessed that this agreement could potentially increase competition in the domestic market. Industries with high production costs and lagging technology will face greater pressure from incoming imported goods.
Conversely, sectors requiring raw materials or technology from the US could potentially benefit through reduced production costs.
Unggul noted that relatively vulnerable sectors are generally domestic market-oriented industries with low productivity, such as agriculture, processed food, and light manufacturing.
“Meanwhile, sectors with potential benefits are industries integrated into global value chains such as textiles, electronics, and chemical and pharmaceutical industries,” he added.
He explained that potential import surges could still be balanced by increased Indonesian exports. Zero-tariff opportunities are viewed as a strategic momentum, particularly for the textile industry, given that the US is one of the largest markets for Indonesian textile and apparel products.
“If the market is merely opened without a clear industrial strategy, then Indonesia risks becoming a consumption market for foreign products.”
“However, if accompanied by policies improving industrial productivity, technology investment, and strengthening domestic supply chains, then such an agreement could become the gateway for Indonesia’s integration into global value chains,” he explained.
Unggul added several strategic steps that the government should undertake, noting that with such strategies, Indonesia would not merely be a market, but an important player in the global production chain.