Deni Ghifari, Jakarta – Indonesian exporters are worried that a new United States import tariff entering into force on Tuesday will reduce demand for their products in the US, even though the higher duty applies universally to goods shipped in from any country.

Asked whether exporters were concerned about a potential drop in demand from the US, Indonesian Exporters Association (GPEI) chairman Benny Soetrisno told The Jakarta Post on Tuesday: "Of course."

Levies imposed on imports to the world's largest consumer market have been in flux since April 2 last year, the day US President Donald Trump called "Liberation Day".

The unsettled tariff regime introduced by Trump to try and balance out the county's exports and imports includes a "baseline" tariff of 10 percent and a so-called "reciprocal tariff" that varies by the country of origin and is 19 percent for Indonesia under a bilateral trade agreement signed last Thursday.

However, Benny revealed that the effective rate placed on most goods shipped from Indonesia since last April was still the 3 to 7 percent range of the "old tariffs".

To justify the sweeping duties, alongside the so-called reciprocal tariffs, Trump invoked the International Emergency Economic Powers Act (IEEPA) of 1977, which gives the head of state broad powers to regulate financial transactions upon declaring a national emergency.

Trump has argued that the "large and persistent" US trade deficit with the rest of the world is a national emergency. The US Constitution vests Congress with exclusive authority to issue tariffs, unless the legislature delegates that right to the executive branch through a law, hence Trump's invocation of IEEPA.

The law contains the words "regulate" and "importation", which the Trump administration used as the legal basis for the tariffs, but the US Supreme Court ruled that "those words cannot bear such weight" and therefore rendered the tariff maneuver legally baseless.

The same day the ruling came out, the White House resorted to Section 122 of the 1974 Trade Act, which allows the president to impose tariffs of up to 15 percent for a maximum of 150 days.

On that legal basis, a general import tariff of 10 percent entered into force on Tuesday and is to remain in effect until July 24. Trump posted on Truth Social on Saturday that the rate would be ramped up to the maximum 15 percent, but Washington has yet to issue a document to make that rate official.

US Customs and Border Protection said it would stop collecting tariffs imposed under IEEPA starting Tuesday and start to collect the Section 122 tariff on the same day, according to AFP.

The new tariff was introduced on Friday through a presidential proclamation that contains a list of items exempted from the duties "because of the needs of the United States economy".

Indonesian Employers Association (Apindo) chairwoman Shinta Kamdani told the Post on Tuesday that, rather than the specific rate and its impact on cash flow, the sticking point for businesses was the speed at which trade policy was changing.

"In business practice, recurring uncertainty is more disruptive than the changing of the number itself," Shinta said, adding that "a changing tariff policy that is rapid and complex could potentially stir confusion at strategic and operational levels".

The archipelago's top five export goods to the US, which accounted for US$2.15 billion of the $31 billion of Indonesian exports to the US in 2025, are not on the exemption list.

Statistics Indonesia (BPS) data shows that assembled and unassembled photovoltaic cells, a precursor to solar panels, were the top two Indonesian exports to the US by value in 2025, followed by electrical machines and apparatus, sports footwear and refined palm oil.

Far from being exempted, Washington was weighing countervailing duties on Indonesian solar panels, pending a decision from the US Commerce Department, Reuters reported Monday.

Despite the hefty jump to 10 percent from between 3 and 7 percent, and possibly to 15 percent later – GPEI's Benny noted that the new tariff would not increase costs for Indonesian exporters, since US importers are the ones bearing the increase.

Ultimately, American consumers will be the ones to absorb the tariff burden, he added.

He stressed that, since the tariff applied to imports from all countries, it did not make Indonesian goods less competitive vis-a-vis exports from other countries.

The case was altogether different under the reciprocal tariff regime that assigned a specific rate to each country, impacting price competitiveness. Under such circumstances, Benny said, Indonesian exporters would have "negotiated with our [US] buyers" to split the tariff burden to maintain a competitive price.

Asked whether the exporters would ask for government subsidies should Indonesia end up with less competitive tariffs, Benny replied: "Never mind the government; they're struggling with fiscal management".

Lori Wallach, director of the Rethink Trade program at Washington-based think tank American Economic Liberties Project, told the Post on Sunday that Section 122 only serves as a temporary measure to address a balance-of-payments deficit and that it is arguable whether the US has a balance-of-payment deficit problem or not.

This is the first time Section 122 has been used, but extending the tariff beyond 150 days requires congressional approval.

The trade lawyer predicted that the new tariff would remain untouched for 150 days but was skeptical that the administration could extend it afterward, since "that will certainly end up in court".

Melinda St. Louis, a global trade analyst at US-based nonprofit organization Public Citizen, told the Post on Sunday that the White House might resort to Section 232 of the Trade Expansion Act of 1962 and Section 328 of the Tariff Act of 1930. On top of Section 122, the 1974 Trade Act contained sections 201 and 301 that might serve as pathways for Trump's tariff policy.

"However, all these avenues require the administration to follow certain alternative procedures, and in the process, limit the ability to impose tariffs of the scale, scope and duration as under the IEEPA," St. Louis noted.

Source: https://asianews.network/indonesian-exporters-worry-about-us-demand-as-new-tariff-kicks-in