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US tariffs unleash ‘perfect storm’ on 2025 state budget
Fiscal discipline is the key to riding out the "perfect storm" swirling around the state budget due to weakening exports amid a global trade war and planned tariff concessions to appease Washington, according to economists who also cautioned about the government's readiness in strategizing for a worst-case scenario.
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A worker uses a lift truck to move a shipping container on Sept. 17, 2024, at Tanjung Priok Port in North Jakarta. (Antara/Indrianto Eko Suwarso)
T
he United States’ tariff policy is expected to add stress to an already pressured state budget, taking a toll on state revenues as the government maintains that its costly programs must go on.
Syafruddin Karimi, an economist at Andalas University (Unand), told The Jakarta Post on Wednesday that ongoing developments spelled “a perfect storm” for this year’s state budget, raising even greater urgency for fiscal discipline to avoid future complications.
At this point, the country faced a risk of a widening deficit due to the combination of weakening exports amid a global trade war and a planned tariff concession to appease the US, he said, which could together lead to a decline in state revenue.
“I assess that Indonesia’s fiscal condition this year is under serious pressure and deserves extra attention,” said Syafruddin.
On April 2, US President Donald Trump imposed a 10 percent blanket tariff on imports from all countries, while higher duties were levied on dozens of select nations, including a rate of 32 percent for Indonesia.
The United States is Indonesia’s second-largest export destination after China, and the two economic giants contributed respectively 10 percent and 23 percent in total export value last year, according to data from the International Trade Centre.
Tariff talks
