Jakarta. Indonesian Finance Minister Sri Mulyani Indrawati on Tuesday criticized the sweeping US tariff hikes under President Donald Trump, arguing that the policy lacks scientific grounding and defies fundamental economic principles.

Indonesia, which has consistently recorded trade surpluses with the United States in recent years, is now facing a 32 percent US tariff -- well above the baseline 10 percent rate.

"The US reciprocal tariffs imposed on 60 emerging economies are based on calculations that, I believe, many economists struggle to comprehend," Sri Mulyani said during a public discussion with President Prabowo Subianto on Indonesia’s response to the tariff hikes.

Tariffs are calculated using a controversial formula based on the size of the US goods trade deficit with a country divided by its total imports, then halved. For example, the US trade deficit with China is $295 billion out of $440 billion in imports, which yields a 67 percent figure — halved to set a 34 percent tariff.

She noted that the Trump administration’s approach appears disconnected from established economic theory. “The usual economic sciences don’t apply to how these individualized tariffs are being formulated. The focus is simply on reducing import reliance,” she said.

"Tariffs were introduced with the sole goal of narrowing the US trade deficit, but there was no scientific or theoretical basis behind them. Reducing a deficit should mean not buying more than you sell -- it’s purely transactional,” she explained.

Sri Mulyani argued that the US government is pursuing populist and pragmatic policies rather than adhering to long-standing economic ideologies that have shaped international trade since World War II.

She also warned that the global financial markets are being rattled by the sudden and uncoordinated nature of the tariff hikes, along with the lack of a unified global response.

“This is a situation we must face with open-minded, pragmatic, and agile strategies,” she said.

Sri Mulyani, a US-educated economist, previously served as a Managing Director at the World Bank from 2010 to 2016. She is also the only finance minister to have served under three different Indonesian presidents, underscoring her enduring influence on the country’s economic policy.

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