Restructuring Import Strategy Following Trade Agreements

Signing trade agreements between Indonesia and the United States, and Indonesia and India, marks a new phase in managing foreign commerce. Although some provisions have not yet taken full effect, the direction of policy is already apparent. Indonesia must adjust its import composition to better align with trade balance equilibrium and bilateral relationship stability.

Previously, the primary considerations in determining supplier countries were price and product availability. The economic logic was straightforward: if goods were cheaper and supply guaranteed, this represented the rational choice.

However, in the context of strategic trade relationships, this approach is no longer sufficient. Trade balance has now become an increasingly decisive factor, particularly as Indonesia’s surplus with certain partners continues to widen.

Data from the Ministry of Trade shows that in recent years Indonesia has enjoyed significant surpluses with the United States and India. With the United States, the surplus has consistently remained above USD 10 billion annually, reaching approximately USD 18.1 billion in 2025. With India, the surplus has increased from USD 6.6 billion in 2020 to approximately USD 13.5 billion in 2025, even briefly touching USD 14.7 billion in 2024.

Economically, these surpluses reflect Indonesia’s export competitiveness. However, in bilateral relationship practice, excessively large imbalances frequently generate rebalancing pressures. Partner countries will push to increase their exports to reduce their deficits. In such situations, the government faces a choice between maintaining the old pattern with the risk of facing protective policies, or making measured adjustments that still protect national interests.

What Changes is the Source, Not the Need

It is important to understand that trade agreements do not automatically increase Indonesia’s total import requirements. Demand for crude oil, wheat, maize, steel, or commercial vehicles remains determined by domestic demand and domestic production capacity. If crude oil demand stands at a particular level, that figure does not change simply because an agreement exists.

What can be certain is a change in the countries of origin for goods that Indonesia will purchase. If Indonesia decides to increase imports from one country, logically there must be a reduction in purchases from other countries to keep the total controlled. Simply put, following trade agreements, what occurs is a redistribution of supply sources, not an expansion of volume.

This is where strategy becomes crucial. Indonesia still records substantial trade deficits with several countries, including China and Singapore. In 2025, the deficit with China is estimated to reach USD 20.5 billion, whilst with Singapore USD 5.5 billion. Adjustment room can be created through reducing imports from countries with large deficits, then redirecting those purchases to partners that have historically run deficits with Indonesia.

Rebalancing with India

In relations with India, one issue that has emerged is the plan to import commercial vehicles and trucks in large quantities. This policy has sparked public debate due to concerns about impacts on the domestic automotive industry. However, in terms of trade structure, balancing options from India are relatively limited compared with the United States.

If importing commercial vehicles is considered sensitive, the government still has alternatives such as steel or energy products in the form of fuel. The consequence is clear: increasing steel imports from India means reducing imports from other countries, particularly China, which has been the main supplier. The implication of an agreement turns out to affect not just bilateral relations, but alters the broader trade configuration.

Import Diversification from the United States

Unlike India, commodities from the United States are more varied. In the energy sector, Indonesia can increase imports of crude oil and fuel from the United States by reducing supplies from other countries such as Nigeria, Angola, or Gabon.

However, this cannot be done suddenly because it is bound by long-term contracts and legal aspects. Halting purchases abruptly risks triggering disputes and supply disruptions. Therefore, adjustments must be made gradually and in measured fashion.

In the agricultural sector, redirecting some imports of maize and soybeans from Argentina and Brazil, and wheat from Ukraine and Russia to the United States is also possible. For beef, major suppliers such as Australia also have the potential to share market share.

Counter-Trade as a Strategic Instrument

Although reducing import volumes becomes the primary instrument, this approach does not always have to be the sole option. For countries with large populations and significant market potential (such as Nigeria, Brazil, and Russia), Indonesia has broader negotiation room.

Large-population countries have relatively high absorption capacity for Indonesian products. In this context, the government can pursue two routes simultaneously through selective volume adjustments to imports, whilst simultaneously encouraging increased purchases of Indonesian products through counter-trade schemes.

This approach is more rational than applying it to countries with small populations with limited market absorption capacity. With Nigeria and Brazil, for example, large domestic markets open opportunities to increase exports of manufacturing, textile, or Indonesian consumer products. With Russia, the potential market for processed food products and certain industrial products can also be expanded.

Thus, the rebalancing strategy does not always mean choosing to reduce purchases. In several cases, increasing purchases of Indonesian products through counter-trade mechanisms, combined with gradual import adjustments from specific countries, represents a more sophisticated and mutually beneficial approach to managing trade relationships whilst maintaining macroeconomic equilibrium.