Shock 32% tariff piles pressure on Indonesia’s trade balance and its battered rupiah

[JAKARTA] The United States’ plan to impose a 32 per cent import tariff on Indonesian goods threatens to upend South-east Asia’s largest economy by disrupting its trade balance, weakening the rupiah and clouding its long-term economic outlook – all while leaving the country’s exporters squeezed between shrinking demand and rising uncertainty.

The tariff hike could be particularly damaging, since Indonesia’s exports to the country consist mainly of manufactured goods such as electronics, footwear, apparel and furniture, rather than raw commodities, said Bahana Sekuritas economists Satria Sambijantoro and Purbiantoro Lintang in a recent note.

“Almost all of Indonesia’s key manufacturing exports to the US grew in 2024, benefiting from American economic resilience. However, if the tariffs are to be increased from the current 10 per cent to 32 per cent, these industries will face a major setback,” they warned.