Jakarta. US President Donald Trump’s sweeping new tariffs officially kicked in on Wednesday, prompting economies like Indonesia and Europe to diversify their export destinations.

Trump’s 10 percent baseline tariff has been in place since Saturday. A fresh wave of higher import tax rates that go as high as 49 percent has just come into effect. These steeper, reciprocal tariffs target countries whom Trump dubs as unfair trading partners. Imports from Indonesia are now officially subject to a 32 percent reciprocal tariff. The European Union gets a lower rate of 20 percent. 

European officials have just voted on the group's first wave of retaliatory tariffs against Washington, while Indonesia picks the safer path of negotiation. As Trump’s policy triggers a trade war, Indonesia and the EU are eyeing each other’s markets with hopes of concluding the much-awaited trade pact soon.

The Indonesia-EU Comprehensive Economic Partnership Agreement (CEPA) remains a work in progress since they began negotiating in July 2016. Senior minister Airlangga Hartarto revealed Tuesday that the treaty could be one of Indonesia’s strategies to access new markets following Trump’s latest trade move. According to Airlangga, the document is nearing completion with both sides only needing to work on the trade transparency aspect.

“The US only accounts for 17 percent [of the world’s trade], and the rest comes from other countries. Mr. President [Prabowo Subianto] has instructed us to tap into that 83 percent global trade,” Airlangga told a business forum that mainly zeroed in on Trump’s tariff salvo.

“The Indonesia-EU CEPA now only has one outstanding issue, namely on trade transparency. But I’m pretty sure we can get it done with the upcoming regulations to be announced by Mr. President,” Airlangga said.

He then cited the EU’s $16.6 trillion economy among the reasons why Europe could be a great market for Indonesian goods. Data shows Europe represented 14 percent of the global trade. Airlangga said that Europe held the biggest market potential for Indonesian footwear and apparel, even beating the opportunities offered in the US.

French Trade Minister Laurent Saint-Martin briefly touched on the CEPA during a press conference on Wednesday evening. Saint-Martin is currently in Jakarta to prepare for French President Emmanuel Macron’s state visit to Indonesia scheduled for late May. The Jakarta Globe asked Saint-Martin whether Trump’s tariffs could be an opportunity to speed up the trade deal negotiations. 

“Generally speaking, the diversification of trade partnerships is indeed among Europe’s agenda. There is no doubt about that. … I’m confident that our EU commissioner will effectively continue the [CEPA] discussions with the Indonesian government,” Saint-Martin said.

European Parliament’s trade chief Bernd Lange not long ago warned that Trump’s tariff could have “a lot of negative consequences” on Indonesia’s economy. Lange also revealed his plans to visit Indonesia later this month to expedite the CEPA talks.

Indonesia enjoys a surplus in its trade with the EU. The Trade Ministry reported that Indonesia's surplus with the EU amounted to nearly $4.5 billion in 2024, almost double the $2.5 billion positive trade balance recorded the previous year.

Official government figures showed that Indonesia’s trade with France -- which makes up a substantial part of the EU economy -- had been within the $2 billion range over the past years, although the numbers fluctuated. Bilateral trade slightly dropped from nearly $2.6 billion in 2023 to $2.4 billion the following year. However, Indonesia’s trade imbalance improved over the said period. The deficit that it ran with France had shrunk from $738.6 million in 2023 to $532.4 million in 2024. 

Indonesia has set a goal to wrap up the EU trade agreement talks within the first half of 2025.

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