Tariffs Extended, Stakes Raised: Turning U.S. Pressure Into Indonesia’s Opportunity
[Updated version]
On 15 July 2025, U.S. President Donald Trump reported that the U.S has reached a trade agreement with Indonesia. It is reported that Indonesian goods face a 19% import duty to enter the U.S, lower than the 32% imposed earlier on 2 April. While much of the conversation has focused on the immediate impact, Mandala takes a broader view—combining recent developments with academic, trade, and business perspectives to uncover both risks and opportunities for Indonesia.
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On 7 July 2025, U.S. President Donald Trump signed a new Executive Order extending the so-called reciprocal tariffs through 1 August. Indonesian goods will continue to face a steep 32% excise duty, first imposed under Trump’s Liberation Day tariffs on 2 April.
While much of the conversation has focused on the immediate impact, Mandala takes a broader view—combining academic, trade, and business perspectives to uncover both risks and opportunities for Indonesia.
In this report, Mandala highlights:
1. Indonesia’s Vulnerabilities
An economic analysis identifying industries most exposed to the tariff, based on export and import values and proportions—plus an overview of Indonesia’s services trade position.
2. Tariffs, Capital Flows, and the Rupiah
An analysis of how these tariffs could impact Indonesia’s international payments—looking at the different ways the effects might unfold and what they could mean for the strength of the rupiah and the country’s overall economic stability.
These tariffs present not only serious risks—but also hidden opportunities, if Indonesia can respond with agility and strategic focus.
- In a recent high-level meeting between Coordinating Minister Airlangga Hartarto, the U.S. Secretary of Commerce, and the U.S. Trade Representative, both sides agreed to intensify reciprocal tariff negotiations over the next three weeks.
- To advance these negotiations, there is a possibility that President Prabowo Subianto will meet directly with U.S. President Donald Trump to negotiate the 32% import tariff.
Read our full report — The Impact of U.S. Liberation Day Tariffs on Indonesia’s Current Account Balance — for data-driven insights on emerging trends and vulnerabilities.