Indonesia's Textile Group Weighs in on Cotton Import Deal to Lower U.S. Tariffs

TEMPO.CO, Jakarta - Cotton imports is part of the deal struck between Indonesia and the U.S., with negotiations ongoing between business actors from both countries. Trade talks continue despite Trump's announcing a lowered tariff of 19 percent on Indonesian products entering the country. 

Executive Director of the Indonesian Textile Association (API) Danang Girindrawardana said the U.S. government once lamented the sluggish cotton purchase from Indonesian businesses. This is caused by the decrease in Indonesia's production capacity.

The reduced purchase is also caused by entrepreneurs opting for other, relatively cheaper, suppliers. "We are importing from other countries with relatively cheaper prices, that's the problem," he said on Monday, July 21, 2025.

When the United States announced reciprocal tariffs, the government involved business players to support the tariff negotiation. The textile association contributed by committing to buy more cotton from the United States.

API sees this agreement as a good opportunity for textile exporters. Additional imports with cotton producers from the United States could provide benefits of reduced tariffs for domestic textile product exports.

That expert councilor of the Indonesian Employers' Association (Apindo) explained the agreement scheme. Indonesia will import cotton from the U.S., then it will be produced or spun in Indonesia, made into fabric or clothing, and then exported back to America.

The scheme will allow for a reduced tariff for Indonesian textile products, even to zero percent. The Americans, he said, hope for the cotton to be entirely sourced from there, so they help lobby to prevent Indonesia from being affected by additional import tariffs. 

However, this approach will have other implications. "Consequently, the price will be higher, logistics will be pricier. But the burden of import tariffs can be reduced significantly from 19 percent," Danang said.

Previously, API was reported to have lobbied an agreement with the U.S.-based cotton industry association, Cotton Council International (CCI). This cooperation plan is part of Indonesia's offer to boost imports from the U.S. agricultural sector.

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