Jakarta. The textile and garment industry is bracing for sharp declines in orders and potential mass layoffs following the United States’ decision to impose a 32 percent import tariff.

Danang Girindrawardana, executive director of the Indonesian Textile Association (API), warned that unless the government successfully negotiates with Washington before the August 1 deadline, the tariff could force domestic producers to slash output and cut jobs to stay afloat. The US accounts for about 40 percent of Indonesia’s textile and garment exports.

“If the 32 percent tariff is enforced, production will decline, and workers will be the first to be affected by efficiency measures,” Danang said Thursday. “We do not want this to happen, but we must prepare for the worst-case scenario.”

Danang estimates that 50,000 to 70,000 workers could lose their jobs if the tariff remains in place, reflecting a severe hit to Indonesia’s labor-intensive manufacturing sector. During the pandemic, nearly 30 textile companies in Indonesia laid off 120,000 workers amid a slowdown in the global economy.

Between January and April 2025, at least 70,000 Indonesian workers lost their jobs, nearly matching the 80,000 increase in unemployment recorded over the previous year, according to the Labor Party and a coalition of trade unions. Official government data, however, recorded 24,000 layoffs as of May 2025.

Indonesia’s textiles face an additional disadvantage against competitors like Vietnam, which enjoys a lower US import tariff of around 20 percent, making Vietnamese products more attractive to American importers. Vietnam’s larger production capacity further amplifies its competitive edge over Indonesia.

Danang urged the government to negotiate sector-specific tariff adjustments with the US to minimize damage to the industry. While it may be unrealistic to request a complete waiver of the import tariff, he suggested that the government could seek lower rates for sectors with lower competitive indices while maintaining the higher tariffs for sectors where Indonesia competes strongly.

“Negotiating a 32 percent tariff by sector could help us secure differentiated rates,” Danang said. “We need a locomotive sector like textiles to strengthen trade relations with the US.”

Indonesia’s ready-made garments are among its top export products to the US, with shipments valued at $1.27 billion between January and May 2025, according to Berita Satu Research. Other leading exports include sports shoes, palm oil, knitwear, and footwear.

Overall, Indonesia’s exports reached $111.98 billion in the first five months of 2025, with China as the largest destination at $24.25 billion, followed by the US at $12.11 billion.

Indonesia has sent its Chief Economic Affairs Minister, Airlangga Hartarto, to Washington for talks with the US Trade Representative as it seeks to ease trade tensions.

To sweeten the deal, state-owned energy giant Pertamina, through its refining arm Kilang Pertamina Internasional, signed memoranda of understanding this week with ExxonMobil, Chevron, and KDT Global Resources. The agreements are part of Indonesia’s broader plan to deepen engagement with the United States, including potential deals worth up to $34 billion, with $15.5 billion earmarked for energy imports.

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