Indonesia is intensifying efforts to avert a deepening trade conflict with the United States, as Washington imposes new tariffs on Jakarta’s exports in response to perceived trade barriers. Following a high-level meeting on April 7, 2025, Coordinating Economic Minister Airlangga Hartarto announced plans to increase imports of American goods, a strategic move aimed at narrowing Indonesia’s substantial trade surplus with the US and easing bilateral tensions.
Trade Imbalance Sparks US Tariffs
The core of the dispute lies in Indonesia’s trade surplus with the US, which stands at an estimated US$18 trillion according to government figures. This imbalance has drawn scrutiny from the US Trade Representative (USTR), whose 2025 National Trade Estimate Report on Foreign Trade Barriers criticized Jakarta’s policies. The report highlights a range of issues, from high tariff rates to complex licensing requirements for imports like horticultural and animal products. It estimates that Indonesia’s trade measures equate to a 64 percent tariff rate on US goods when factoring in currency practices and other barriers. 
In retaliation, the US imposed a 32 percent tariff on Indonesian imports effective April 9, following an initial 10 percent baseline tariff applied to all countries on April 5. These measures, described by Washington as “reciprocal tariffs,” underscore growing frustration over market access and trade equity. For Indonesia, the stakes are high—exports to the US, including textiles, electronics, and palm oil, form a critical part of its economy, and further escalation could dampen growth projections.
Jakarta’s Response: Imports and Negotiations
In a press conference after Monday’s meeting, Airlangga revealed that President Prabowo Subianto had directed officials to address the surplus by boosting imports of US products. “The President has given the instruction to narrow the trade surplus by importing more US products that we need, including wheat, cotton, or even oil and gas products” said Airlangga. He added that such imports could be prioritized for national strategic projects, such as refinery development, signaling a pragmatic approach to balancing trade flows.
Rather than mirroring the US with retaliatory tariffs—a path taken by some nations—Indonesia is opting for dialogue. Airlangga emphasized that Jakarta would “take the negotiation path” and avoid escalation, a stance he noted aligns with most ASEAN member states. A regional meeting scheduled for April 10 aims to harmonize ASEAN’s collective response to US trade policies, potentially strengthening Indonesia’s bargaining position.
Concrete steps are already underway. Deputy Industry Minister Faisol Riza confirmed that a high-ranking delegation, led by Airlangga alongside Finance Minister Sri Mulyani Indrawati and Foreign Minister Sugiono, will travel to the US for talks with White House officials by April 17 at the latest. Febrio Nathan Kacaribu, head of the Finance Ministry’s Fiscal Policy Agency, noted that Airlangga and Sugiono are set to depart “next week,” underscoring the urgency of the mission.
Concessions on the Table
Indonesia’s negotiation strategy includes several concessions designed to placate US concerns. Faisol hinted at reducing minimum local content requirements (known as TKDN) specifically for US products, though he refrained from detailing the extent of the rollback. Such a move could ease access for American manufacturers in sectors where local content rules have historically posed barriers.
Additionally, the government is considering administrative leniency in taxation, customs, and excise policies. Unlike the TKDN adjustments, these measures would apply universally, not just to the US, potentially benefiting other trading partners as well. Deputy Finance Minister Anggito Abimanyu also indicated that tariff reductions are under discussion, though specifics remain undisclosed.
These offers mirror broader regional trends. In a recent post on Truth Social, US President Donald Trump claimed that Vietnam has proposed cutting tariffs on US products to zero as part of its own trade negotiations. While no such commitment has been confirmed by Hanoi, the statement suggests that Southeast Asian nations are under pressure to make significant concessions to maintain favorable access to the US market.
Broader Implications for ASEAN
Indonesia’s approach could set a precedent for how ASEAN navigates trade disputes with major powers. The region, often caught between economic giants like the US and China, has historically sought to balance national interests with collective bargaining. Airlangga’s reference to calibrating stances with ASEAN counterparts on April 10 highlights a desire for a unified front, though differing national priorities—such as Vietnam’s apparent tariff cuts—may complicate consensus.
Domestically, the strategy has sparked mixed reactions. Business groups, as reported in local media, have urged swift negotiations to protect export-driven industries. However, critics warn that increasing US imports and relaxing local content rules could undermine domestic producers, particularly in agriculture and manufacturing. Wheat and cotton imports, for instance, may compete with local supply chains, while reduced TKDN requirements could limit opportunities for Indonesian firms in strategic sectors.
Historical Context of Trade Frictions
Trade tensions between Indonesia and the US are not new. Over the past decade, as noted in the USTR report, Jakarta has incrementally raised tariffs on goods competing with locally manufactured products, a policy aimed at bolstering domestic industries. Measures like stringent licensing for horticultural imports have long irritated Washington, which argues they distort fair competition. Indonesia, in turn, defends these policies as essential for economic self-reliance and protecting small-scale producers.
The current dispute also reflects broader shifts in US trade policy under President Trump, whose administration has prioritized reducing trade deficits through aggressive tariffs and bilateral negotiations. For Indonesia, navigating this landscape requires a delicate balance—conceding enough to avoid punitive measures while safeguarding national interests.
Economic Stakes and Future Outlook
The economic implications of a prolonged trade spat are significant. Indonesia’s exports to the US, valued at billions annually, support millions of jobs across sectors like textiles, footwear, and agriculture. A sustained tariff war could disrupt these industries, slow GDP growth, and strain government revenues. Conversely, increasing imports from the US, while potentially easing tensions, risks inflating Indonesia’s import bill at a time when global commodity prices remain volatile.
Analysts suggest that Jakarta’s willingness to negotiate reflects a pragmatic recognition of its economic vulnerabilities. Unlike larger economies with greater leverage, Indonesia must tread carefully to avoid alienating a key market. Yet, the government’s proposed concessions—particularly on local content rules—may face domestic pushback if perceived as prioritizing foreign interests over local ones.
Another layer of complexity arises from currency dynamics. The USTR report’s mention of “currency manipulation” as a contributing factor to trade barriers echoes long-standing US concerns over exchange rate policies in Asia. While Indonesia has not been formally labeled a currency manipulator in recent years, any perception of undervaluation could further complicate negotiations.
Looking Ahead
As Indonesia prepares for crucial talks in Washington, the outcome remains uncertain. A successful agreement could stabilize trade relations and avert further tariffs, providing a much-needed reprieve for exporters. However, failure to reach a compromise risks escalating tensions, with potential ripple effects across ASEAN. For now, Jakarta’s strategy of dialogue over retaliation offers a glimmer of hope, but the road to resolution is fraught with challenges.
Public sentiment, both in Indonesia and the US, will likely play a role in shaping the negotiations’ trajectory. As Airlangga and his team embark on their mission, questions linger about whether these concessions will suffice to mend ties—or if deeper structural issues in global trade will continue to strain this critical partnership.
