Indonesia Prepares Negotiation Packages for US Reciprocal Tariff Policy

TheIndonesia.co - The Indonesian government is preparing a series of negotiation packages to bring to the talks in Washington D.C. regarding the United States' reciprocal tariff policy.

According to Antara News Agency, Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized that diplomatic channels were chosen as a mutually beneficial solution, avoiding retaliatory measures against the US tariff policy.

However, the Indonesian government will first meet with ASEAN leaders on April 10, 2025, to align their positions.

"Indonesia itself will encourage several agreements with ASEAN countries. The trade ministers are also communicating with Malaysia, Singapore, Cambodia, and others to calibrate ASEAN's collective stance," Airlangga said in a press conference in Jakarta on Monday.

During his meeting with business representatives, the Indonesian government announced that it had prepared several negotiation packages.

The first proposal includes revitalizing the Trade & Investment Framework Agreement (TIFA), a trade cooperation agreement signed bilaterally in 1996, which Airlangga noted has become outdated.

"We will push for the revitalization of various policies to be included in TIFA," he said.

Secondly, the government will propose the deregulation of Non-Tariff Measures (NTMs) by relaxing domestic component requirements (TKDN) in the information and communication technology sector. There will also be an evaluation of the restrictions on US export and import goods.

The third solution Indonesia aims to pursue is to increase imports and investment from the US, particularly through the purchase of oil and gas.

Fourth, the government is preparing fiscal and non-fiscal incentives through strategies such as reducing import duties, income tax (PPh), and value-added tax (VAT) on imports to encourage imports from the US and maintain export competitiveness to the US.

"Regarding tariffs and how we can increase imports, how we can balance imports and exports, we aim to reach $18 billion in imports, including products like wheat, cotton, and oil and gas," Airlangga explained.

According to data from the Ministry of Trade (Kemendag), Indonesia had a trade surplus with the US of $14.34 billion in 2024.

The largest surplus was from machinery and electrical equipment, valued at $4.18 billion last year. This was followed by clothing and clothing accessories, valued at $2.84 billion, and footwear, valued at $2.39 billion.

Despite this, the US recorded a trade deficit with Indonesia of $17.9 billion in 2024.

Minister Airlangga added that Indonesian diplomats have been in communication with the U.S. Trade Representative (USTR), which is currently awaiting concrete proposals from Indonesia.