THE country wants a fair and equal relationship with the US, and will pursue diplomacy to address a 32% tariff rate imposed by the Trump administration, President Prabowo Subianto said, while his ministers work to finalise its negotiation proposal.
“We will also open negotiations with America. We will say, we want a good relationship. We want a fair relationship. We want an equal relationship,” Prabowo said during a rice harvesting event in West Java.
Jakarta has said it would pursue negotiations rather than retaliate against the US tariffs, and will send a high-level delegation to the United States.
Indonesia is among six South-East Asian countries that were slapped with high tariffs by US President Donald Trump last week. The levies are set to take effect on April 9.
Prabowo’s Cabinet ministers have been working on a proposal to address the tariffs by offering to buy more US products such as cotton, wheat, oil and gas, as well as pledging to resolve non-tariff barriers and possible tax cuts on US goods.
Airlangga Hartarto, the chief economic minister who will lead Indonesia’s high-level delegation to US, met with more than a hundred business associations yesterday to gather input.
Following the meeting, the government came up with a plan to increase imports from the US, including buying components for an oil refinery project and reviewing the possibility to reduce a local content rule for US tech and communication firms.
The finance ministry said its fiscal posture is unchanged at the moment and it will try to maintain it amid the current situation.
It has set a higher 5.2% GDP growth target this year, versus 5.03% last year. The fiscal deficit will be maintained at 2.53% of GDP.
Indonesia posted a US$16.8bil trade surplus with the US last year, which was its third-biggest export destination, receiving shipments worth US$26.3bil in 2024, according to government data.
Indonesia’s main exports to the US include electronics, apparel and footwear. Jakarta will support labour-intensive industry from the impact of the tariffs, which are also affecting financial investors’ appetite for emerging markets.
The archipelago’s economy has struggled in recent weeks, hit by a stock market sell-off and currency slump. The rupiah is at its lowest since the 1998 financial crisis and its main stock index slid as much as 7.1% last month.
Bank Indonesia said yesterday it would “intervene aggressively” in domestic foreign exchange markets when they reopen today after a public holiday since March 28. — Reuters
Save 30% for ads-free and full access now!
