Jakarta. The US tariffs on Indonesian goods are projected to ultimately reach 18%, according to a senior official, after taking into account the two unfair trade practice-related probes.

The Donald Trump 2.0 has proposed tariffs of either 10% or 12.5% on dozens of countries, following an investigation into how they handle imported goods made with forced labor. Indonesia faces a lower rate of 10%. While Indonesia has rolled out a fresh ministerial regulation aimed at curbing such practices, the US notes that Jakarta has not seized any of the bad imports, hence the tariff. 

Just recently, Jakarta made another attempt at allaying the tariff salvo when its senior economic minister Airlangga Hartarto met with Trump’s trade chief Jamieson Greer on the margins of an OECD gathering in Paris this week. 

To the Jakarta Globe, Airlangga’s aide Susiwijono Moegiarso -- who was on that Paris trip -- revealed that the final tariff would hinge on another US probe into structural excess manufacturing capacity. The US is expected to announce whether Indonesia is guilty of this excess capacity, including the size of the additional duties, in the coming weeks. The forced labor and excess capacity probes combined are projected to push the final tariff on Indonesia to 18%.

However, their entry into force would take place in phases after the current 10% global tariff expires on July 24.

“After July 24, the [US] will gradually adjust the tariff structure, starting with the 10% forced labor levy. They will later add another [tariff] component related to structural excess capacity over the next several weeks," Susiwijono told the Globe.

“The final [18%] rate is still subject to legal and administrative processes in the US,” Susiwijono said, adding that Jakarta still had to go through further hearings.

Susiwijono claimed that the Trump government would exempt several items from the import taxes, while granting a “special mechanism” for textiles -- a key Indonesian export. In an earlier statement, Greer had said that Washington would reduce tariffs for “a certain volume of apparel and textile imports from certain economies”.

Trump has been wanting to rebuild his tariff wall after the Supreme Court declared his even broader double-digit levies illegal in February.

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