Economist Urges Indonesian Govt Reassesses Zero Tariff Policy on U.S. Goods

TEMPO.CO, Jakarta - U.S. President Donald Trump has lowered import tariffs on Indonesian products to 19 percent from the previous 32 percent. In return, Indonesia will grant zero percent tariffs on U.S. imports entering the country. 

The Executive Director of the Center of Reform on Economics (CORE) Indonesia, Mohammad Faisal, believes that eliminating levies on U.S. products will erode state revenues from the import charges. Import tariffs on U.S. products previously varied.

But with the deal struck between the U.S. and Indonesia, he said, the tariff exemption will impact the state budget. "The import tariffs used to be above 10 percent on U.S. products entering Indonesia," he told Tempo.

He's also concerned about how the tariff-free deal would affect local products, especially in the agricultural sector. Faisal believed that this could pose a new challenge for Indonesia to boost domestic production capacity and achieve self-sufficiency targets.

"The question remains whether this deal aligns with the efforts to strengthen and downstream the agricultural sector," he said.

According to Faisal, the government must reassess the impact before implementing the tariff-free policy on U.S. goods. Previously, President Prabowo Subianto said that the negotiation process with Trump was tough before reaching an agreement.

Even though Trump lowered Indonesia's import tariffs from 32 percent to 19 percent, Prabowo continued to push for more favorable terms. "I still negotiate; I say he is also a tough negotiator," Prabowo remarked at Halim Perdanakusumah Air Force Base in Jakarta on Wednesday, July 16, 2025.

When asked about the tariff-free deal, Prabowo said the government has calculated the impact of all negotiation outcomes. stated that the government had calculated the impact of all the negotiations. "We also consider what is important to me, which is my people," he said.

"We also have a stance. This is their offer. But what is important to me, our workers are safe," he added.

Meanwhile, Trade Minister Budi Santoso said that some U.S. goods have had a zero percent tariff all this time. "The tariffs for wheat and soybeans are already zero percent, and we don't produce them, so we need to import them," he said.

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