Jakarta, Indonesia – In Indonesian news today, the nation's textile and apparel industry is coming under severe threat as the United States imposes high new tariffs. With roughly 40% of Indonesian textile exports being to the U.S., the impact is going to be crippling, with warnings of mass layoffs and decreased competitiveness.
The U.S. government's recent move is imposing a 32% "reciprocal" tariff on Indonesian goods, to be undertaken after the current 90-day suspension period for bilateral negotiations expires. The sudden escalation of trade tension has caught Indonesian manufacturers off guard.
Export Diversification Challenges
Efforts at distracting attention away from the U.S. market on a short-term basis have been challenging for Indonesia. Weak demand and stiff competition from regional producers in alternative markets are mentioned by industry observers as main barriers to diversification.
In 2024, Indonesia enjoyed a whopping $16.8 billion trade surplus with the U.S. Yet in early April, U.S. President Donald Trump said he would slap a 32% tariff on Indonesian imports. Following international outcry, the administration temporarily dropped duties to 10% for a 90-day period of grace—a window that industry leaders fear may not be long enough for meaningful recovery or strategy shifts.
Industry Leaders Sound the Alarm
Redma Gita Wirawasta, chairman of the Indonesian Fiber and Filament Yarn Producers Association (APSyFI), stated that the increased tariffs will further undermine Indonesia's price competitiveness in the U.S. market. He added that it can also pave the way for surplus products from other countries to flow into Indonesia, destabilizing the already weak domestic textile sector.
"This can accelerate retrenchment across the board," Redma told a press conference on April 4.
Even before this latest tariff policy, textile and footwear factories in Indonesia were coming under growing pressure. The closure of PT Sri Rejeki Isman in March, which left over 10,000 employees jobless, highlighted the vulnerable state of the industry.
On March 5, the Banten Manpower and Transmigration Agency announced mass layoffs by major shoe manufacturers PT Adis Dimension Footwear and PT Victory Chingluh Indonesia—both of which are suppliers of global brands Nike, Adidas, and Reebok.
Short-Term Opportunities and Long-Term Risks
There are exporters who see the 90-day reprieve as an opportunity to export more goods to the U.S. in the near term. But APSyFI's Redma warns that it may boomerang by adding to the U.S. trade deficit with Indonesia—which is one of the key reasons cited by the U.S. for imposing the tariff increase.
Finance Minister Sri Mulyani Indrawati emphasized the need to reduce Indonesia's reliance on the U.S. market. She reiterated that the government was resolved to conducting strategic negotiations with Washington and diversifying export markets.
Indonesian Textile Association chairman Jemmy Kartiwa Sastraatmaja concurred. "We must negotiate intelligently with the U.S., and also guard our domestic market wisely," he said.
Outlook for Indonesia's Economy
The move is the newest in a series of trade issues facing Indonesia in 2025. While the government is stepping up diplomatic efforts, business leaders call for swift intervention to protect one of Indonesia's largest non-oil export industries.
Meanwhile, the Indonesia latest news emphasizes the need for flexibility and creativity in the face of global economic shifts. The outcome of negotiations with the U.S. could very possibly chart the course for Indonesia's textile sector and general economic health going forward.