ASIATODAY.ID, JAKARTA — Indonesia has scored a major diplomatic win in international trade. The United States (US) has officially imposed new import tariffs on ASEAN countries, but Indonesia secured the lowest rate at 19%, a significant drop from the previous 32%.
This achievement stems from a high-level trade agreement between President Prabowo Subianto and US President Donald Trump, making Indonesia the first country in the region to finalize a deal following the US’s tariff policy announcement earlier this July.
In response, the Coordinating Ministry for Economic Affairs held a public outreach session on Monday, July 21, 2025 with business players and trade associations to explain the implications and opportunities stemming from this new reciprocal tariff policy.
Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized that the 19% tariff rate is the lowest among ASEAN nations. For comparison: Vietnam and the Philippines: 20%, Malaysia and Brunei: 25%, Thailand and Cambodia: 36% and Myanmar and Laos: 40%.
Outside ASEAN, other textile-exporting competitors such as Bangladesh face a 35% tariff, Sri Lanka 30%, Pakistan 29%, and India 27%.
“This lower tariff gives Indonesia a strong competitive edge in global trade,” said Minister Airlangga during a press briefing.
Minister Airlangga also explained that Indonesia’s Most Favored Nation (MFN) import tariff structure is already progressive. According to the 2022 Indonesian Customs Tariff Book (BTKI), 47.1% of tariff lines are at 5%, while 11.7% are completely duty-free.
Indonesia has also granted 0% tariffs to many of its trade partners through agreements such as the ASEAN-China FTA, IEU-CEPA, ASEAN-Australia-New Zealand FTA, and the Japan-Indonesia Economic Partnership Agreement.
As part of the agreement, Indonesia will purchase several US-origin products. However, Minister Airlangga clarified that this will not negatively impact the country’s trade balance. These imports—such as wheat, soybeans, and energy products—are already being sourced from other countries and will simply be redirected to US suppliers.
“This is a strategic move that supports domestic needs without widening the trade deficit,” Airlangga affirmed.
The newly agreed reciprocal tariff benefits will help protect nearly 1 million jobs in Indonesia’s labor-intensive industries. Moreover, key export commodities like palm oil are gaining increased traction in both US and European markets, further strengthening Indonesia’s trade position.
“Without this agreement, we could risk losing 1 million jobs. The US wants to be a strategic partner to Indonesia—the third-largest democracy and the biggest economy in Southeast Asia,” Airlangga emphasized.
Minister Airlangga concluded that Indonesia is among the first countries to finalize this agreement with the US, meaning that the general US tariff increase scheduled for August 1 will not apply to Indonesia. Instead, the new 19% rate will be officially confirmed in a forthcoming Joint Statement.
The outreach event was attended by high-ranking government officials including the Deputy Chairs of the National Economic Council (DEN), Deputy Ministers of MSMEs, Finance, Industry, Energy and Mineral Resources, Investment, and key representatives from state-owned enterprises (SOEs), business associations, and relevant ministries. (AT Network)
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