World Bank Reveals Ways to Avoid Impact of US Tariffs on Indonesia

The World Bank assesses that the impact of US global policies, including trade tariffs, on Indonesia’s export performance is relatively limited. Aaditya Mattoo, the World Bank’s Chief Economist for East Asia and the Pacific, stated that the total tariffs currently facing Indonesia are below 20 percent. This figure is comparable to Vietnam, though slightly higher than Malaysia and Thailand. “When calculated through models, the impact of (US tariffs) on Indonesia’s real income is only around 0.2 percent, thus not causing a significant negative impact on GDP,” he said, as quoted from Antara on Wednesday, 8 April 2026. The World Bank’s study in the April 2026 edition of the East Asia and Pacific Economic Update shows that the negative effects of US trade tariffs can be mitigated through domestic trade policy reforms. Indonesia is said to still impose many non-tariff barriers, such as import regulations for raw materials and strict technical standards. “If Indonesia undertakes reforms to reduce non-tariff barriers on goods and services, the benefits from those reforms will far outweigh the costs due to US tariffs. In this way, the negative impact of tariffs can be eliminated,” Mattoo said. He emphasised that through domestic policies, Indonesia can render the Trump tariffs a minor issue, as the benefits of domestic reforms will far surpass the costs of those tariff policies. Previously, on 19 February 2026, Indonesia and the United States agreed to a reciprocal trade agreement during a meeting between President Prabowo Subianto and President Donald Trump in Washington, DC. That agreement is documented in the Agreement on Reciprocal Trade (ART), which has been officially signed by both heads of state. In general, the US applies an average tariff of 19 percent to products originating from Indonesia. However, the US government provides special exemptions for certain identified products receiving 0 percent tariffs. In return, Indonesia has eliminated tariffs on 99 percent of products originating from the US. The World Bank report notes that these reciprocal tariffs were subsequently replaced with global tariffs of 10 percent imposed under Section 122 of the Trade Act of 1974. These tariffs are temporary and apply until July 2026. The Central Statistics Agency (BPS) recorded Indonesia’s export value for January–December 2025 at US$282.91 billion, an increase of 6.15 percent compared to the same period in 2024. Of that amount, non-oil and gas exports reached US$269.84 billion, up 7.66 percent. The United States is the second-largest export destination country with a value of US$30.96 billion, after China at US$64.82 billion. Non-oil and gas exports to the US were recorded at US$4,420.2 million, up 16.66 percent from the previous year. Meanwhile, Indonesia’s import value for the January–December 2025 period reached US$241.86 billion, an increase of 2.83 percent from the previous year. Non-oil and gas imports also rose 5.11 percent to US$209.09 billion. The United States ranks third as a supplier of imported goods with a value of US$9.84 billion or 4.70 percent of total imports.