With President-elect Donald Trump’s tariff bluster showing no signs of abating, Indonesia’s government is hoping to strike a fortuitous trade deal with the U.S. that would decrease duties on products like clothes and shoes.
“We are requesting bilateral economic cooperation to help lower tariffs,” Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, told an audience at the IBC Business Competitiveness Outlook 2025 summit in the country’s capitol of Jakarta on Monday.
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With less than one week before Trump’s inauguration, Airlangga said Indonesia has been strategizing about negotiating with the incoming U.S. president to mitigate the impacts of expected tariff increases on U.S.-bound products from across the globe. A collaborative resolution between the two countries could involve a free-trade agreement (FTA), Airlangga said, according to Indonesian news outlet Tempo.
The economic minister noted that the Indonesian government is also monitoring Trump’s threat to raise tariffs on BRICS nations by 100 percent should the trade bloc (which includes China, Russia, Brazil, India, South Africa, Egypt, Iran and Ethiopia) create its own currency to compete with the U.S. dollar. Indonesia officially became the first Southeast Asian member of the BRICS Alliance one week ago.
Airlangga attempted to assuage concerns about potential U.S. trade actions against BRICS, noting that key Indonesian exports are already subject to U.S. tariffs. “America has been imposing tariffs on our products, including shoes, apparel, and other commodities,” he said.
As one of America’s largest Southeast Asian trading partners, second to Vietnam , Airlangga seemed to imply that Indonesia could pursue similar trade terms. The U.S.-Vietnam Bilateral Trade Agreement (BTA), signed in 2001, normalized trade relations between the two nations and brought down the average tariff rate on Vietnamese goods from around 40 percent to 3 percent, according to the U.S. Embassy and Consulate in Vietnam.
In return, Vietnam committed to reform certain trade and investment policies to create a more favorable and fair business environment for U.S. companies doing business in the country.
In spite of the existing duties on Indonesian products, bilateral trade between the U.S. and Indonesia is strong, having reached $34.5 billion in 2023 and $31.6 billion during the first 10 months of 2024. During his first term in office, Trump requested a review of Indonesia’s eligibility for the now-expired Generalized System of Preferences (GSP)—which created duty-free exemptions for certain products like travel goods and furniture—because of the trade deficit between the two countries. Indonesia exported $3.56 billion to the U.S. under GSP in 2023, though the benefits of the agreement lapsed on Dec. 31, 2020.
Following Trump’s 2018 order, the Indonesian government said it would intensify communication with Washington in pursuit of a resolution. Those talks are likely to continue during Trump’s second term, though GSP has shown few signs of an imminent renewal.
While it is part of a well-oiled Asian supply chain with China as its nucleus, Indonesia has attempted to push back against the superpower in recent months due to adverse impacts to its domestic apparel market caused by Chinese e-commerce.
Last summer, Indonesian minister of trade Minister of Trade Zulkifli Hasan said the deluge of cheap, China-made garments was threatening to “collapse” the country’s network of 64 million micro, small and medium-sized enterprises, Al Jazeera reported.
As of last fall, the Indonesian government is still mulling a 200-percent tariff increase on China-made clothing, footwear, ceramics and cosmetics—a plan backed by thousands of workers who protested in Jakarta throughout 2024.
“The United States can impose a 200-percent tariff on imported ceramics or clothes; we can do it as well to ensure our MSMEs and industries will survive and thrive,” Zulkifli said at the time.
