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View all search resultsRI exporters seek to split tariffs with US buyers to ensure demand
Estimates for the burden-sharing arrangement would depend on how much of the price increase US consumers could absorb, something that “will take time” to determine.
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Maintaining margins: A worker supervises loading and unloading services on March 28, 2023, at the Jakarta International Container Terminal at Tanjung Priok Port in North Jakarta. According to a recent Statistics Indonesia (BPS) report, Indonesian exports grew 7.13 percent year-on-year in September 2024 to US$23.56 billion, the highest figure since December 2022. (AFP/Adek Berry )
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ndonesian exporters are looking to split the tariff load with their buyers in the United States to maintain a competitive price, the success of which economists say ultimately rests on how high the import duties imposed on other countries get since pressing down cost to maintain a margin is easier said than done.
Indonesian Exporters Association (GPEI) chairman Benny Soetrisno said the outcome of the government’s negotiations with Washington, which resulted in a reduced tariff of 19 percent for Indonesia, down from the originally threatened 32 percent, appeared to be the best possible deal.
However, he acknowledged that export adjustments would still be necessary.
“While the tariff remains ineffective, we are negotiating burden-sharing with our buyers,” Benny told The Jakarta Post on Friday, adding that US importers would likely abide since they “do not rely on just one source to maintain supply security”.
He noted that estimates for the burden-sharing arrangement would depend on how much of the price increase US consumers could absorb, something that “will take time” to determine. Once that figure becomes clear, Indonesian exporters and their US counterparts will be able to decide how to split the tariff burden to remain price-competitive.
BCA chief economist David Sumual told the Post on Friday that a similar burden-sharing scheme had been adopted during the first term of US President Donald Trump from 2017 to 2021.
“The name of the game was to strike a balance between passing on as much of the burden as possible to US consumers while maintaining a competitive price,” David explained. “Otherwise, US importers might turn to suppliers from other countries.”
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