In a bold reassertion of his America First trade policy, U.S. President Donald Trump has announced a sweeping global reciprocal tariff framework, including a 32% import duty on goods from Indonesia. The move, part of Trump’s renewed campaign rhetoric and policy positioning, marks a dramatic shift in U.S. trade relations and is already generating global economic ripples.
The Global Reciprocal Tariff (GRT) policy is rooted in the principle of parity: if a country imposes high tariffs on U.S. exports, the U.S. will respond with identical tariffs on their imports. In Trump’s words, “Whatever countries charge the United States of America, we will charge them. No more, no less.”
This tariff strategy is aimed at addressing what Trump describes as “unfair trade imbalances” that disadvantage American industries and workers. The policy targets countries with significant trade surpluses with the U.S., especially those with non-reciprocal tariff regimes. Indonesia, with a trade surplus of approximately $16.8 billion with the U.S. in 2024, found itself squarely in Trump’s crosshairs.
Before the implementation of Donald Trump’s 2025 Global Reciprocal Tariff policy, the trade relationship between the United States and Indonesia was characterized by a relatively stable, albeit limited, framework grounded in multilateral norms and soft bilateral engagement. While Indonesia was removed from the U.S. Generalized System of Preferences (GSP) in 2020—during Trump’s first term—there were no punitive tariffs specifically targeting Indonesian products during the Biden administration (2021–2024). Trade relations during that period relied heavily on mechanisms such as the Trade and Investment Framework Agreement (TIFA) and Indonesia’s participation in the Indo-Pacific Economic Framework (IPEF). Both initiatives emphasized regulatory cooperation, transparency, and investment facilitation, but neither included provisions for tariff reduction or preferential market access.
Following Trump’s return to the office and his 2025 announcement of the Global Reciprocal Tariff, U.S. trade policy took a dramatic turn toward unilateralism and protectionism. Trump introduced a blanket policy of tariff reciprocity, meaning the United States would impose the same tariff rates on imports from countries that apply to U.S. goods. This marked a significant escalation in trade policy, transforming the previous dialogue-based relationship into one defined by tariff retaliation and aggressive trade balancing.
In contrast to the earlier approach, which prioritized multilateralism, rule-based engagement, and soft power diplomacy, the 2025 Trump policy relies on unilateral tariff measures as a primary economic tool. The 32% tariff constitutes a major trade barrier and signals a shift away from established norms under the World Trade Organization (WTO). While the previous policies allowed Indonesia to adapt gradually to changing global standards, the current tariffs pose immediate economic challenges and disrupt supply chains. The new tariff disproportionately affects key Indonesian export sectors, including footwear, textiles, electronics, and palm oil—industries that are critical to Indonesia’s employment and foreign exchange earnings.
In response, Indonesia has refrained from retaliatory measures, instead opting for a diplomatic approach that includes sending a high-level delegation to Washington for negotiations and accelerating efforts to diversify its export markets, especially within the European Union and regional Asian economies. This policy shift has also prompted Indonesia to reassess its reliance on the U.S. market and to advocate for deeper regional economic integration as a hedge against future trade shocks.
Indonesia is a major trading partner of the United States, exporting a wide array of goods, including textiles, electronics, rubber, palm oil, and footwear. The 32% tariff is expected to hit these sectors hard, especially labor-intensive industries like apparel and footwear, which rely heavily on access to the U.S. market. The Trump campaign claims the tariff is necessary to level the playing field and encourage domestic production in the United States. Critics, however, argue that such measures could raise consumer prices, disrupt supply chains, and strain relations with a key Southeast Asian ally.
In contrast to more confrontational trade disputes in recent years, Indonesia has opted for a calm and measured response. Coordinating Minister for Economic Affairs Airlangga Hartarto stated that Indonesia would not retaliate with tariffs of its own. “Indonesia is committed to preserving economic stability and maintaining strong diplomatic and trade relations with all countries, including the United States,” Hartarto said. Instead of retaliating, Indonesia plans to increase support for affected exporters and ramp up diplomatic engagement.
The Indonesian government is also preparing to send a high-level delegation to Washington to negotiate exemptions or reductions in the tariff. At the same time, Jakarta is exploring alternative markets, particularly in the European Union and other parts of Asia, to diversify its export destinations.
Indonesia is not the only country impacted by the new U.S. tariff policy. Reports suggest that other Southeast Asian nations, such as Vietnam, Malaysia, and Thailand, have also been hit with duties ranging from 32% to 49%. While some countries have hinted at possible trade retaliation, most are adopting a wait-and-see approach.
China, however, has already responded aggressively, setting the stage for what could be a broader trade war. Over 50 countries have reportedly requested urgent trade talks with Washington in light of the tariff announcement. The European Union has warned of potential WTO disputes and retaliatory measures if their industries are negatively affected.
Markets have reacted sharply to the announcement. Global stock indexes, including the S&P 500 and the Nasdaq, saw declines amid investor fears of escalating trade tensions and global supply chain disruptions. Economists warn that a prolonged tariff battle could weigh on global growth and trigger inflationary pressures.
In Indonesia, industry groups warn that small- and medium-sized enterprises (SMEs) could be disproportionately affected, particularly those without the capacity to pivot quickly to new markets. Analysts say this could put thousands of jobs at risk if the tariffs remain in place for an extended period.
Trump’s Global Reciprocal Tariff strategy marks a significant escalation in protectionist trade policy. By imposing a 32% import duty on Indonesian goods, the U.S. is signaling its intent to rebalance what it sees as lopsided trade relationships. While Indonesia has responded diplomatically and is seeking dialogue, the long-term impact on both countries—and the broader global economy—remains uncertain. As the world watches how this policy unfolds, one thing is clear: the global trading system is entering a new era of heightened tension, negotiation, and potential realignment.
