Government Acts Swiftly to Protect National Economy from the Impact of Trump’s Import Tariffs
By: Dhita Karuniawati
The policy style of U.S. President Donald Trump highlights trade protectionism, particularly through the imposition of import tariffs on various countries. This policy has wide-reaching effects—not only on major economies such as China and European Union countries but also on developing nations, including Indonesia. In response to Trump’s move to raise import tariffs on foreign products, the Indonesian government has taken swift and strategic action to protect the national economy from potential shocks.
As part of the global market, Indonesia feels the impact of Trump’s import tariff policy. Although Indonesian products are not directly subjected to these tariffs, the government remains vigilant regarding potential spillover effects on global trade dynamics.
The Indonesian government recognizes the importance of acting quickly to avoid being further drawn into the global turmoil caused by U.S. protectionist policies. Therefore, several strategic measures have been promptly implemented to maintain national economic stability, including export market diversification, strengthening import substitution industries, stabilizing exchange rates and inflation, and protecting micro, small, and medium enterprises (MSMEs).
Indonesia plans to diversify its export markets following the imposition of reciprocal tariffs by President Trump on all U.S. trading partners. Coordinating Minister for Economic Affairs Airlangga Hartarto stated that Indonesia has the opportunity to open markets covering 83% of global trade. To realize this, the government will leverage markets and investments from various international cooperation forums. Additionally, the government is accelerating negotiations on several trade agreements, one of which is the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA).
Airlangga said that President Prabowo Subianto has directed that the IEU-CEPA include 31 issues, among them trade transparency. IEU-CEPA will provide access to the European Union’s market valued at USD 16.6 trillion.
Indonesia is also expediting negotiations on the Indonesia-Eurasian Economic Union CEPA (I-EAEU CEPA). According to Airlangga’s presentation, this trade agreement will open access to the Russian market valued at USD 2.5 trillion.
Airlangga added that Indonesia is also utilizing the potential markets of various existing international cooperation forums, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Organisation for Economic Co-operation and Development (OECD), and BRICS+.
Specifically regarding the CPTPP, Airlangga mentioned that Indonesia has initiated accession processes, which are expected to provide an alternative to balance market exposure. Moreover, Indonesia is also engaged in other forums such as the G20, Indo-Pacific Economic Framework (IPEF), ASEAN, and the Gulf Cooperation Council (GCC).
Meanwhile, the Ministry of Micro, Small, and Medium Enterprises (MSMEs) stated that the government is preparing additional regulations to mitigate the effects of reciprocal tariffs imposed by President Trump on Indonesia.
MSME Minister Maman Abdurrahman explained that these new regulations are intended to protect and strengthen the domestic market as a proactive measure against the tariffs.
Maman noted that these regulations are currently being discussed jointly with Coordinating Minister for Economic Affairs Airlangga Hartarto and Finance Minister Sri Mulyani Indrawati, in parallel with ongoing negotiations between the U.S. and Indonesia. The regulations will soon be formalized into concrete policies through inter-ministerial coordination and continued negotiations with the U.S. Ultimately, the policies will focus on three economic policy directions.
In response to Trump’s tariffs, Maman emphasized that the MSME Ministry will push for diversification and strengthening of the domestic market. Market diversification does not only target foreign markets but also includes reinforcing the domestic market.
Maman stressed that Indonesia must prioritize its domestic market given the population of approximately 250 million. Amid growing global uncertainty, Bank Indonesia (BI) decided to hold its benchmark interest rate steady at 5.75%.
This decision was made during BI’s Board of Governors Meeting (RDG) to maintain rupiah exchange rate stability and ensure inflation in 2025 and 2026 remains within the target range of 2.5% ± 1%. BI Governor Perry Warjiyo emphasized that despite rising global challenges, Indonesia’s economic stability is maintained through responsive monetary and fiscal policies. He highlighted the impact of the reciprocal tariff policy by President Trump, which has triggered international trade tensions including retaliation from China.
Domestically, BI projects Indonesia’s economic growth in 2025 to be slightly below the midpoint of the 4.7 to 5.5% range. Nevertheless, economic performance in the first quarter of 2025 remains solid thanks to robust household consumption.
President Donald Trump’s import tariff policy poses a real challenge for many countries worldwide, including Indonesia. However, with swift and measured steps, the Indonesian government has succeeded in maintaining economic stability and protecting vital sectors from the negative effects of this policy.
Market diversification, strengthening of domestic industries, macroeconomic stabilization, and protection of MSMEs remain the core strategies pursued by the government. Moving forward, commitment to structural reforms and economic competitiveness must be continuously strengthened so that Indonesia can become a key player in the new global economic order post-protectionism era.
