By: Meliana Kede )*
President Prabowo Subianto emphasized that the agreement to reduce import tariffs on Indonesian goods to the United States, which is now only 19 percent, is the result of tough negotiations by the government, but is also very beneficial.
In his Instagram post, President Prabowo conveyed that he had had quite a long discussion with United States President Donald Trump until the two reached an agreement to bring trade relations between the two countries into a new era that is considered mutually beneficial for both parties.
President Prabowo Subianto emphasized that the Indonesian and US governments were able to understand each other’s interests, so that the negotiations succeeded in reducing the tariff from 32 percent to just 19 percent.
The Head of State realized that the negotiation process was not easy to carry out, especially when he tried to negotiate a lower tariff rate, but Donald Trump continued to show a fairly tough stance in maintaining the agreement.
President Prabowo continues to appreciate the final outcome of the negotiations they have carried out, as he believes the agreement was reached through careful consideration, with the primary goal of protecting the interests of all Indonesians, especially workers.
He also emphasized that the government had calculated all risks and benefits, so that the national economy could maintain a strong foundation, even though the trade agreement would allow US products to enter Indonesia tariff-free.
Meanwhile, Trade Minister Budi Santoso added that the imposition of the 19 percent tariff had various positive impacts, including at least two significant benefits for Indonesia: increasing export competitiveness and attracting foreign investment into the country.
Budi noted that the tariff agreement of only 19 percent was the lowest among other ASEAN countries, thus placing Indonesian products in a strategic position to further increase export activity to the US market.
According to him, this condition can also encourage producers in Indonesia to continue improving the quality of their products and at the same time be able to adapt to global market standards.
Budi also explained that the new tariff policy opens up greater opportunities to expand Indonesia’s export market to the United States. He hopes the tariff policy will remain in place until at least next August.
Prior to Trump’s policy, imported goods from all countries were subject to the same tariff, but now each country faces different tariffs. This gives Indonesia a competitive advantage because it has lower tariffs than other countries. Budi also emphasized that this tariff advantage will attract foreign investment, which requires a competitive production base to export to the United States market.
On a different occasion, Senior Analyst at the Indonesia Strategic and Economic Action Institution, Ronny P Sasmita, assessed that although Indonesia imposed a 19 percent tariff and the US zero percent, the policy was fair from a geopolitical perspective.
Ronny explained that international trade policies cannot be assessed solely through nominal figures because they also include geopolitical policies that consider the comparative advantages of each country.
He emphasized that the reciprocal theory in international trade does not always mean that both parties impose the same tariffs on each other, but rather based on the benefits and drawbacks received by both parties.
Ronny views Indonesia’s requirement to import energy, agricultural, and aircraft products as a reasonable trade mechanism. He believes Indonesia still benefits from not having its own aircraft industry, so when tariffs on Boeing products are reduced, Indonesian airlines can purchase aircraft at significantly lower prices.
A similar situation occurs with the import of energy and agricultural products such as wheat, which Indonesia needs and has long sourced from the United States, Russia, and Ukraine.
According to Ronny, the US’s zero percent tariff policy on products currently imported by Indonesia will actually benefit domestic companies and consumers.
Lower commodity prices resulting from tariff elimination will lower production costs, increase industry profit margins, and lower selling prices in the market, so that consumers will ultimately benefit economically from the agreement.
Ronny also emphasized that the 19 percent tariff on Indonesian exports would actually strengthen Indonesia’s position as a competitive exporter. He considered the policy fair because it benefits both parties, even though it appears economically imbalanced on the surface.
In a geopolitical context, such trade policies are nothing new because every country has strategic considerations in negotiating its interests in the global market.
The agreement between President Prabowo Subianto and President Donald Trump on a 19 percent tariff on Indonesian exports and a zero percent tariff policy on US products entering Indonesia reflects a measured trade strategy. The agreement is considered beneficial, both for increasing export competitiveness and strengthening the purchasing power and productivity of the national industry. (*)
)*Macroeconomic Analyst – Nusantara Economic Center (SEN)
