Bambang Ismoyo, Jakarta – The newly imposed 32 percent tariffs by the United States on Indonesian imports are expected to significantly impact Indonesia's automotive and electronics exports, a leading economist warned on Thursday.
Between 2019 and 2023, Indonesia's exports in both sectors recorded an average annual growth of 11 percent, including to the US market, according to Bhima Yudhistira, executive director of the Center of Economics and Law Studies (Celios).
Bhima said the tariffs, announced a day earlier by US President Donald Trump, could begin to have serious effects as early as the fourth quarter of this year and potentially slow down Indonesia's broader economic growth.
"With the 32 percent reciprocal tariffs, Indonesia's automotive and electronics sectors are in jeopardy," Bhima said. Citing Celios data, he noted that Indonesia's automotive exports to the US were valued at $280.4 million in 2023.
He explained that the additional import taxes would raise the cost of Indonesian vehicles in the US market, dampening consumer demand and ultimately reducing export volumes.
"Automotive manufacturers in Indonesia cannot easily redirect their products to the domestic market due to differences in specifications," he added. Vehicles sold in Indonesia use right-hand drive, unlike those in the US. "The immediate consequences could include reduced production capacity and layoffs."
Bhima also warned that labor-intensive sectors such as garments and textiles, which benefit from US investment, may also be affected.
"When these tariffs take effect, many US brands will likely cut orders from their Indonesian factories. Meanwhile, our domestic market could be flooded with surplus products from Vietnam, Cambodia, and China, as these countries seek alternatives to the US market," he explained.
He further projected that for every 1 percentage point decline in US economic growth, Indonesia's GDP could slow by 0.08 percentage points.
Source: https://jakartaglobe.id/business/us-tariffs-to-hit-indonesian-auto-and-electronics-export