Gain more insights for expanding your business in Indonesia by downloading our
“Guide to Doing Business in Indonesia” eBook.
Download Free eBook
KIT Batang: China’s Gateway to Central Java

KIT Batang: A Strategic Hub for China in Indonesia

The recent designation of the Batang Integrated Industrial Estate (KIT Batang) as a Special Economic Zone (SEZ) represents a significant step in strengthening economic collaboration between…

25 April 2025
5 minutes reading time
Central Java Business Trends & Market Outlook

Central Java Business Trends: A Strong and Promising Outlook 

Central Java’s economy looks strong for 2025. This is due to steady consumer demand, low inflation, and large investments in infrastructure and industry. In 2024, the region…

23 April 2025
5 minutes reading time
10 Facts About Consulting Services You Should Know

10 Key Facts About Consulting Services You Should Know

Consulting services have become an essential part of modern businesses. Consultants provide expert solutions to complex challenges for startups, enterprises seeking to increase efficiency, and companies…

22 April 2025
7 minutes reading time
14 Business Models & How to Choose the Right One

Understanding Business Model and How to Choose the Right One

A business model is the backbone of any company, defining how it creates, delivers, and captures value. Whether launching a startup or refining an existing venture,…

21 April 2025
7 minutes reading time
Trade relationships around the globe are evolving, and none are more dynamic than those between Indonesia and the United States. With the imposition of new US tariffs, Indonesian exporters are confronting challenges that demand both reaction and strategic reinvention. However, Indonesian exporters' resilience and determination are evident as they navigate these changes, which affect their bottom line, long-term business models, market access, and product positioning. Overview of US-Indonesia Trade Relations The United States and Indonesia share a strong trade relationship, with Indonesia exporting a wide range of products to the US, including textiles, rubber, footwear, and electronics. In recent years, Indonesia has maintained a trade surplus, meaning it exports more to the US than it imports. While this benefits Indonesian businesses, it has also led the US government to review its trade policies and impose tariffs on some Indonesian goods. These US tariffs make Indonesian goods more expensive in the American market, creating challenges for exporters. To stay competitive, Indonesian businesses must adapt by adjusting their strategies, exploring new markets, and improving product value. The increased costs due to tariffs can lead to a decline in competitiveness, loss of market share, and potential financial strain on businesses. Specific Sectors and Products Affected by the US Tariffs The recent imposition of US import tariffs has pressured several key Indonesian export sectors. Among the most affected industries are: Rubber and Rubber-Based Products Rubber remains one of Indonesia's major exports to the US. With a new 32% tariff on some rubber-based goods, companies face a sharp decline in competitiveness. This affects everything from tires to industrial gloves, which previously had a price advantage in the US market. Textile and Apparel The textile and garment industry, a pillar of Indonesia's manufacturing economy, is also stressed. Due to the increased costs brought on by tariffs, US buyers are now reconsidering sourcing from Indonesia and turning to countries with better trade terms instead. Electronics and Electrical Machinery Electronic components and electrical machinery, especially low-voltage devices, are seeing higher entry costs due to US tariffs in Indonesia. While not across the board, selective product categories have experienced a notable decline in demand from US importers. Palm Oil Derivatives Though raw palm oil isn't heavily taxed, derivatives like glycerin and oleochemicals in cosmetics and industrial applications face stricter scrutiny and higher duties. This hits Indonesian chemical and personal care product manufacturers hard. Footwear and Leather Products Footwear producers are grappling with shrinking margins as US tariffs push up the retail price of their products. Many small and mid-sized firms, reliant on export volume, may struggle to absorb these added costs without losing their buyers. How Do Other Asian Exporters Compare? Several Asian exporters deal with new US tariffs, but the impact varies. Here's how Indonesia compares to its regional neighbors: Infographic table China faces the steepest increase, with tariffs spiking 145%, pushing US buyers to look elsewhere. Vietnam, Thailand, Malaysia, the Philippines, and Singapore now enjoy a flat 10% tariff, boosting their competitiveness. In contrast, Indonesia still faces up to 32% tariffs on key products, which disadvantages its exporters. This highlights the need for fast, strategic adaptation. Read more: Why Relocating to Indonesia is a Smart Strategy for Chinese Companies New Strategies for Accelerating Export Growth in Indonesia China’s Investment Prospects in Indonesia’s Leading Exports How Indonesian Businesses Can Adapt to the US Tariffs Indonesia must take a proactive stance to turn trade challenges into long-term advantages. With the 90-day pause on the 32% US tariffs, there's a crucial window to realign its trade and export strategies. Expand into Under-Tapped Markets New markets like Africa and South America offer significant growth potential, providing Indonesian exporters with a reason to be optimistic. Trade with Africa hit US$13.7 billion in 2023, and commitments surged by 496.7% at the 2024 Indonesia-Africa Forum. Key exports include palm oil, vehicles, and electronics. In South America, Indonesia exported over US$1.58 billion to Brazil and US$347 million to Chile, mainly in the automotive and footwear sectors. Reform Regulations to Attract Investment Lowering the US$700,000 capital requirement for foreign-owned firms would ease the entry of global investors and boost local manufacturing and exports. Digitize and Empower MSMEs With 20.99 million MSMEs already online, the target of 30 million by 2024 can enhance productivity and export readiness in sectors like fashion, furniture, and food. Strengthen Trade Infrastructure Indonesia plans to invest US$25.5 billion in logistics and energy networks, including the Trans-Sumatra Toll Road and port digitalization. These upgrades will cut costs and improve exporter delivery. Accelerate Trade Diplomacy Indonesia is negotiating free trade agreements with the GCC and Mercosur while using the pause in tariffs to push for better terms with the US. These agreements could potentially reduce or eliminate tariffs on Indonesian exports to these regions, opening up new markets and reducing the impact of US tariffs. A high-level delegation is set to visit Washington, D.C., on April 17, 2025, to further these negotiations. Prepare for Uncertainty Though the tariffs are paused, businesses should remain alert. Exporters should renegotiate terms, assess risk, and explore shifting some operations to ASEAN partners with lower tariffs. Stay Competitive Amid US Tariffs with InCorp The rising US tariffs may pose serious challenges but also open the door for transformation. Whether you're a first-time exporter or an established player looking to expand, navigating the complexities of global trade requires expert support. It's crucial to stay competitive amid these tariffs, which should motivate and focus Indonesian exporters on their strategies and market positioning. InCorp Indonesia (an Ascentium Company) provides end-to-end solutions for your export journey with: Complete Export Support: We seamlessly handle the entire export process, from legal setup to customs clearance and logistics. Local Expertise, Global Network: Our deep knowledge of Indonesian regulations and substantial international reach ensure smooth market entry. Tailored Solutions for Your Business: We offer personalized strategies based on your products, target markets, and industry goals. Fill out the form below to expand your business globally with confidence.

Adapting to US Tariffs: Strategies for Indonesian Exporters

Trade relationships around the globe are evolving, and none are more dynamic than those between Indonesia and the United States. With the imposition of new US…

17 April 2025
5 minutes reading time
Indonesia's Halal Economy: Investment & Growth Guide

Investing Potential in Indonesia’s Halal Economy

With the distinction of being home to the largest Muslim population globally, Indonesia is strategically positioned to shape the burgeoning global halal economy. Its potential spans…

16 April 2025
5 minutes reading time
How Chinese Companies Can Relocate to Indonesia Amid US Tariffs

Why Relocating to Indonesia is a Smart Strategy for Chinese Companies

The trade war between the United States and China began after Donald Trump took office as US President and introduced high tariffs on Chinese products. These…

15 April 2025
5 minutes reading time
How to Import Animal Products into Indonesia

How to Legally Import Animal Products into Indonesia

Importing animal products to Indonesia involves navigating a complex regulatory landscape that includes licensing, compliance with health standards, and adherence to import quotas. The Indonesian government strictly…

14 April 2025
5 minutes reading time
Custom Declaration Indonesia: What You Can & Can’t Bring

Indonesia Customs Declaration: A Complete Guide for a Smooth Arrival

Whether traveling to Indonesia for business or leisure, travelers must comply with customs regulations. The Indonesia customs declaration process ensures that travelers declare taxable items, restricted…

14 April 2025
6 minutes reading time
Gas Company in Indonesia: Top 10 Industry Leaders

Top 10 Successful Oil and Gas Companies in Indonesia

Indonesia, a country rich in natural resources, is home to some of Southeast Asia’s biggest oil and gas companies. These companies are crucial to the nation’s…

9 April 2025
7 minutes reading time
5 Benefits of Doing Business in Millennium Industrial Estate

Why Millennium Industrial Estate is a Prime Investment & Business Hub

The Millennium Industrial Estate is rapidly emerging as a premier business hub in Indonesia, attracting investors and enterprises looking for a strategic location to establish their…

9 April 2025
6 minutes reading time
10 Ways an Outsourcing Company Helps Manufacturing Business

10 Reasons Outsourcing Services Will Supercharge Your Manufacturing Growth

Manufacturing businesses continually seek ways to optimize operations, cut costs, and increase efficiency. One of the best strategies for achieving this is partnering with an outsourcing…

8 April 2025
7 minutes reading time