US Reciprocal Tariffs Focused on Reducing Deficit Rather Than Opening Markets
JAKARTA — US trade policy through a reciprocal tariff scheme is assessed as being driven more by that country’s domestic interests to suppress its trade deficit, rather than simply opening balanced market access for partner nations, including Indonesia.
Ahmad Heri Firdaus, researcher at INDEF’s Centre for Industry, Trade, and Investment, views this move as part of the US government’s strategy to reduce its trade deficit, which has exceeded 1 trillion US dollars.
“Essentially, the United States wants to reduce that trade deficit and accumulate revenue. The way is by imposing tariffs on exports from countries like Indonesia,” he said during INDEF’s online discussion “Gains and Losses of US-Indonesia Trade Agreements” on Friday (27 February 2026).
In addition, the scale of US government spending also factors into the country’s efforts to seek additional revenue sources, including through strengthening its trading position with partner nations.
On the other hand, Firdaus noted that the implications of this policy for Indonesia need to be carefully examined, particularly concerning the performance of national exports.
Currently, the United States is one of the main markets for Indonesian non-oil exports, contributing approximately 10 to 11 per cent of total non-oil exports.
This situation forces Indonesian products to compete more fiercely, even when obtaining lower tariff facilities.
“When products from various countries compete in the same market, production cost becomes the main determinant of competitiveness,” he explained.
If domestic production costs are higher, Indonesian products risk losing price competitiveness compared to competing nations.
Goods from countries struggling to penetrate the US market can be redirected to other markets, including Indonesia, thereby increasing competition for domestic industry.
In such circumstances, export market diversification becomes a strategic step needed to reduce dependence on particular markets, including the United States.
In addition to market diversification, strengthening the domestic market also becomes an important factor in sustaining economic growth.
Moreover, improving efficiency and reducing production costs are also key to strengthening the competitiveness of Indonesian industry.
Therefore, improvements to cost structure, increases in productivity, and appropriate policy support are assessed as being able to help domestic industry compete more effectively in international markets.