April 24, 2025 | 05:17 pm
TEMPO.CO, Jakarta - The Indonesian Trade Ministry is considering the European Union and the UK as alternative export destinations in response to U.S. President Donald Trump's import tariff policies. Indonesia is exporting palm oil derivatives, electrical appliances, and garments to the U.S. Indonesia's exports to the U.S. in 2023 reached US$27.9 billion, the second largest after China.
Meanwhile, based on Trade Ministry data, Indonesia's trade balance with the European Union in 2024 recorded a surplus of US$4.5 billion. Indonesia's main exports to the European Union are similar to those to the U.S., primarily palm oil and its derivatives.
Indonesia also exports a lot of copper ore and concentrate, industrial monocarboxylic fatty acids, footwear, meal, and solid residues to the European Union. Imports from the European Union include pharmaceuticals, pulp-making machinery from cellulose materials, motor vehicles, and machinery and equipment.
"Europe and the UK actually have a huge market potential, not just the traditional market," said the Director General of National Export Development of the Trade Ministry, Fajarini Puntodewi, when met in the Cikini area, Central Jakarta, on Thursday, April 24, 2025.
According to Fajarini, the Trade Ministry plans to convince exporters to redirect their focus from the U.S. to the European Union and the UK. Indonesia's exports to the European Union in 2024 reached US$17.3 billion, a 4.01 percent growth compared to the previous year. Meanwhile, the EU's imports were valued at US$12.8 billion, showing a 9.12 percent decline.
Meanwhile, Indonesia's exports to the UK in 2023 reached US$2.86 billion based on data from The Observatory of Economic Complexity (OEC). The main export from Indonesia to the UK is matt nickel.
In addition to being one of the main export destinations, the European Union also ranks as the 9th source of Foreign Direct Investment (FDI) for Indonesia. The EU's investment in Indonesia in 2024 reached US$1.1 billion from 11 thousand projects.
Despite the FDI value decreasing by 52.4 percent compared to the US$2.32 billion in 2023. Meanwhile, it reached US$9.9 billion in 2020-2024 with over 37 thousand projects.
Previously, the Director General of International Trade Negotiations at the Trade Ministry, Djatmiko Bris Witjaksono, stated that the current tariffs on Indonesian textile and clothing products to the U.S. range from 15 to 30 percent. Starting from the initial tariffs of 5 to 20 percent, plus a new baseline tariff of 10 percent that took effect on April 5, 2025.
Indonesian export products are threatened with Trump's reciprocal tariffs. The new U.S. import tariff policy consists of three types: new baseline tariffs, sectoral tariffs, and reciprocal tariffs. For Indonesia, the reciprocal tariff of 32 percent has indeed been announced, but was postponed for 90 days from April 9, 2025.
If the 32 percent reciprocal tariff is implemented, the total import tariff for Indonesian textile and clothing products could reach 37-52 percent. This is due to the combination of the initial tariff (5-20 percent) with the reciprocal tariff, replacing the new baseline tariff previously applied. With this potential tariff, Indonesian exporters must seek new export destinations to anticipate declining exports due to these tariffs.
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