Jakarta. US President Donald Trump will impose a 32 percent import tariff on Indonesian goods starting August 1, 2025, a sharp increase from the 10 percent temporary tariff implemented since April, as Washington moves to protect its domestic industries.

Josua Pardede, Chief Economist at Permata Bank, said the aggressive tariff reflects concerns in the US manufacturing sector about competition from imported goods, including from Indonesia.

“This policy aims to protect US domestic industries that feel threatened by rising competitiveness of imports, especially in labor-intensive sectors like textiles, garments, and electronics,” Josua said on Tuesday.

By imposing higher tariffs, Trump hopes to curb the influx of imported goods and push consumption toward US-made products. However, Josua said the policy could add to inflationary pressures in the US.

Aside from economic motives, Josua sees Trump’s tariff move as part of Washington’s broader political strategy, particularly toward BRICS nations, including Indonesia. Trump has also threatened an additional 10 percent tariff on countries supporting BRICS, as the bloc --comprising Brazil, Russia, India, China, South Africa, and others-- holds its 2025 summit in Brazil this week.

“BRICS collectively represents a large market with significant contributions to the global economy. These tariffs appear to be a reaction to China’s policies as the US seeks to protect its economy. If these policies continue, it will slow down the global economy, benefiting no one,” Josua said.

The bloc has officially admitted Indonesia as its member early this year. BRICS recently slammed Trump’s reciprocal tariffs at its Rio de Janeiro Summit, but the group shied away from directly mentioning the US in its statement. 

Potential Hit to Indonesia’s Economy

Josua warned that Indonesia must brace for a slowdown in export performance and potential investor hesitation, which could drag domestic economic growth.

Industries heavily reliant on exports to the US, including electronics, textiles, garments, footwear, and furniture, will be the most affected, with a direct impact estimated at around 2 percent of GDP.

Indirect effects could hit Indonesia’s key trading partners, reducing their economic growth and weakening demand for Indonesian exports.

Josua estimated that Trump’s tariffs could slow Indonesia’s economic growth by around 0.3 to 0.5 percentage points, lowering the growth forecast from the current baseline of 5.1 percent to around 4.7 percent this year.

“With the implementation of these tariffs, domestic economic growth will inevitably slow,” Josua said.

The Central Statistics Agency (BPS) reported GDP growth of 4.87 percent year-on-year in the first quarter of 2025, down from 5.04 percent in the previous quarter. Meanwhile, Indonesia’s economy is projected to grow by 4.7 percent in 2025 and 4.8 percent in 2026, according to the Organization for Economic Cooperation and Development (OECD) in its June 2025 Economic Outlook.

Indonesia has sent chief negotiator, Airlangga Hartarto, to Washington, DC, to negotiate the tariff. Trump stated that he was open to getting rid of the tariffs if Indonesia is interested in manufacturing its products in the US. 

Before Trump’s letter, Indonesia was supposed to sign a memorandum of understanding (MoU) valued at $34 billion with American business partners on Monday as part of the tariff negotiations. Under the MoU, Southeast Asia's largest economy has proposed buying more American fuels worth $15.5 billion. Indonesia also offered some investment plans involving Indonesia’s sovereign fund Danantara and state-owned enterprises, according to Airlangga.