Despite rising concerns over U.S. trade tariffs under President Donald Trump, Indonesia is far from powerless. While the global market reacts with unease, economic observers believe there are still clear advantages and opportunities for Indonesia if they’re handled strategically.
Last week, it was announced that Indonesia has been hit with a reciprocal tariff rate of 32%. This puts the country in a tough position, but not an isolated one. Malaysia and Japan received a 24% tariff, China 34%, Vietnam 46%, and Singapore 10%.
Finance Minister Sri Mulyani Indrawati responded swiftly, saying the government will continue to mitigate the negative effects of this U.S. policy. “We are committed to managing the impact of these reciprocal tariffs,” she said.
Still, amid the tension, there are silver linings. According to Sucor Sekuritas Chief Economist Ahmad Mikail Zaini, investors in Indonesia shouldn’t overlook the positive outlook buried beneath the U.S. trade tariffs friction.
1. Trade Surplus with the U.S. Still Intact
Although the U.S. only accounts for 9.9% of Indonesia’s exports, the country still maintains a trade surplus of US$16.9 billion — slightly higher than its surplus with India (US$15.4 billion). Ahmad emphasized this: “These tariffs don’t automatically eliminate our trade advantage with the U.S.”
He added that diversification will be key. Indonesia can offset the pressure by strengthening exports to regions like ASEAN, India, China, the EU, Australia, Africa, and the Middle East.
Another factor in Indonesia’s favor is that other countries face even higher tariffs. “Compared to China and Vietnam, which were hit with 34% and 46% respectively, Indonesia’s position is still relatively strong,” Ahmad said.
2. Oil Imports Get Cheaper
The announcement has triggered negative sentiment in oil markets, leading to falling prices. For Indonesia — a net oil importer — this is a bonus. With a US$20.4 billion oil and gas trade deficit, a 21% drop in Brent crude prices from last year could mean a savings of up to US$4 billion.
This decline could also support Indonesia’s monthly trade surplus projection of around US$3 billion, giving the country more room to maneuver.
3. Bond Yields Favor Emerging Markets
U.S. Treasury yields dropped significantly following the tariff announcement — from 4.25% to 3.85% on 10-year bonds. That opened the door for emerging market bonds to rally. India’s and the Philippines’ bond yields dropped by 10 and 15 basis points respectively.
Ahmad expects Indonesia to benefit too. “We estimate that yields for Indonesian bonds (rated BBB by S&P) will also fall. If U.S. yields keep declining, global investors may turn to Indonesian bonds — and that won’t put pressure on the rupiah.”
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4. Narrowing the Primary Income Deficit
Another bright spot lies in capital inflows. With U.S. yields down, local investment instruments are more attractive. For example, Bank Indonesia’s 6-month SVBI now offers a 4.5% return and is tax-free — a far better deal than the 10-year U.S. Treasury.
Ahmad believes this could motivate exporters to keep their foreign exchange earnings inside the country. That would help reduce the primary income deficit, which hit US$36 billion in 2024, despite a US$31 billion trade surplus. This gap was a key contributor to the 0.6% current account deficit (CAD) last year.
5. Bank Indonesia Still Has Firepower
Even amid global turbulence, Bank Indonesia (BI) has not run out of room to act. It still holds strong tools for intervention. At the end of last year, outstanding SRBI stood at Rp892 trillion, while BI’s bond purchases reached Rp495 trillion.
Foreign exchange reserves also remain solid. As of February 2025, Indonesia’s reserves were reported at US$154.5 billion, a strong backstop for managing volatility in the months ahead.
