JAKARTA – Economic Coordinating Minister Airlangga Hartarto has stated that the high import tariff policy imposed by USA President Donald Trump will significantly affect the competitiveness of Indonesia’s export products, including palm oil.
“The increase of reciprocal import tariff by 32% imposed by President Donald Trump is potential to threaten Indonesia’s position at global market, especially in the USA,” Airlangga said in a press statement on Thursday (03/04/2025).
According to him, the USA reciprocal tariff will directly affect Indonesian products of electronics, textiles and textile products, palm oil, rubber, furniture, and fishery products. His statement was issued following the announcement of Trump on Wednesday night that the tariff policy is part of USA Liberation Day celebration.
Analysts have predicted that the USA decision to impose the reciprocal import tariff by 32 percent against Indonesian products will affect millions of smallholders in palm oil and rubber industries in Indonesia. Business players will possibly burden the smallholders by pressing prices lower. “The USA high tariff will push down the prices of top commodities in regions, such as palm oil and rubber,” Economist from Jambi University Alumni Association, Usman Ermulan said.
Currently, the prices of several top commodities are high. The price of palm fresh fruit bunches (FFB) averaged at Rp3,600 per kilogram, while the price of raw rubber is Rp 30,000 per kilogram. “So far, the prices are the highest, which are very encouraging for the small farmers,” he said.
Besides Indonesia, countries like China, Thailand, Vietnam, Japan, South Korea and countries of European Union as the USA traditional allies will be impacted by the high reciprocal tariff.
Potential Opportunities
Based on data from the Palm Oil Agribusiness Strategic Policy Institute (PASPI), Indonesian exports of palm oil to the USA are relatively small, at around 1.5 – 1.7 million tons or 5-6 percent of its total exports of palm oil. “But Indonesia should not underestimate the signal from the USA. It is not mainly about the volume of exports. It’s about domino effect that we’ll be potentially facing at the global market,” PASPI Executive Director Tungkot Sipayung was quoted by PRO3 RRI as saying on Monday (07/04/2025).
Tungkot said the USA uniliteral policy could trigger a chain reaction from other countries. “When a big country takes a defensive stance, other countries could follow so. It can affect the distribution of strategic commodities such as palm oil,” he said.
According to him Indonesia should intensify economic diplomacy aggressively and strategically, including sending a team of negotiators to the USA.
But Tungkot said that behind the trade wars, there is a big opportunity that can be tapped by Indonesia. “Indonesia can take a strategic position as alternative supplier to China. When China starts limiting agriculture imports from the USA, then it will be creating a potential opportunity for Indonesia as an alternative supplier to the country. We should take such opportunity and strengthen our market in China,” he said.
“Also intensifying trade relations with China could function to mitigate impact of trade wars in medium term. With the right strategy Indonesia will not only maintain the stability of palm oil exports, but also increasing market share in East Asia,” he said.
Seeking Negotiations
Minister Airlangga said that the Indonesian government will soon assess the economic impacts of the USA tariff policy and prepare mitigation steps to protect strategic sectors to maintain the stability of national economy. “The government will conduct a holistic evaluation on the impacts of the high tariff and take necessary strategic steps,” he said.
He said that economic stability will become the main priority of the government, including maintaining the governments securities’ yields (SBN), rupiah exchange, and foreign exchange liquidity together with the central bank, Bank Indonesia (BI). “Pressures against rupiah and potential inflation caused by the expensive prices of imported raw materials will be seriously anticipated,” he said.
According to Airlangga, since early this year the Indonesian government has been ready to face the USA protectionist policy by establishing a cross-ministerial and institutional team and pursuing intensive communication with the USA government.
“We’ll send a high level delegation to Washington DC to pursue direct negotiations with the USA. Our goal is to get exemption or reduction of import tariff for our strategic sectors,” he said. (*)
Source: Sawitku.id
