Jakarta. Indonesia must strengthen its domestic economic resilience and expand global market access in response to the United States’ upcoming import tariff hikes, according to Mari Elka Pangestu, Vice Chair of the National Economic Council.

The proposed tariffs, set to take effect in July, could weigh heavily on Indonesian exports, particularly in sectors heavily reliant on the US market, such as apparel, footwear, furniture, and shrimp, Pangestu said Wednesday during the Investor Daily Roundtable at the Westin Hotel in Jakarta.

“These industries export between 50 percent and 60 percent of their products to the US,” the former Trade Minister said. “The impact will be significant, and we must take strategic action to mitigate the risks.”

The Indonesian government has begun rolling out measures to cushion the blow, including plans to establish a special task force to address potential layoffs and labor issues. Pangestu called on policymakers to look beyond short-term mitigation and focus on long-term reforms to boost efficiency and competitiveness.

“One of the most important anticipatory steps is to increase domestic resilience,” she said, adding that regulatory reforms announced by President Prabowo Subianto will play a pivotal role in improving Indonesia’s investment climate.

The warning follows a recent trade mission to Washington, DC, where Chief Economic Minister Airlangga Hartarto and other top officials made a final push to persuade the US to reconsider the planned 32 percent tariff set to take effect in July. The trade mission has given itself a 60-day deadline to reach a deal with the US.

Before the delegation’s departure, President Prabowo had signaled Indonesia’s intent to pursue further reforms aimed at attracting investment and facilitating business operations.

Mari also urged the government to fast-track negotiations for the Indonesia-European Union Comprehensive Economic Partnership Agreement (EU-CEPA) as a key strategy to diversify export markets away from the US.

“Europe is a large market for us,” she said. “It can become a new destination for the sectors most affected by US tariffs.”

The Indonesia-EU Comprehensive Economic Partnership Agreement (EU-CEPA) has been under negotiation since July 2016. Indonesia currently enjoys a trade surplus with the EU, which surged to nearly $4.5 billion in 2024, up from $2.5 billion in the previous year.

Indonesia is also intensifying efforts to diversify its export markets to non-traditional and emerging markets, such as Canada, the United Arab Emirates (UAE), Tunisia, Peru, and Eurasian countries.