Trump to Slap 32% Tariffs on Indonesia Next Month Unless Jakarta Invests in US

Source: Jakarta Globe | Original Published At: 2025-07-08 00:52:00 UTC

Key Points

• Trump maintains 32% tariff threat on Indonesian goods starting August 2025
• Tariff deadline extended three weeks; removal conditional on Indonesian investment in US
• US seeks greater trade balance, accuses Indonesia of non-reciprocal trade practices
• Failed $34 billion MoU on US fuel imports and investments remains unresolved
• BRICS membership linked to potential additional 10% tariff threat

Jakarta. US President Donald Trump announced Monday local time that he was sticking to his plan of slapping 32 percent tariffs on Indonesian goods starting next month, unless the Southeast Asian nation invests in his country.

In other words, Indonesia might have failed to convince Trump to drop his 32 percent reciprocal tariffs that the latter had unveiled in April. His latest statement also officially extended the July 9 tariff deadline by another three weeks.

Trump had just posted a barrage of letters sent to the leaders of his trading partners, including Indonesian President Prabowo Subianto, in a Truth Social post. In that letter for Prabowo, Trump wrote how the US still agreed to work with Indonesia despite a deficit, but this time, Washington wanted a greater trade balance. He said that both sides have already had years-long talks to narrow the gap, but the bilateral ties remained “far from reciprocal.”

“Starting on August 1, 2025, we will charge Indonesia a tariff of only 32 percent on any and all Indonesian products sent into the US, separate from all sectoral tariffs,” Trump wrote in his letter.

Trump warned Indonesia that it could face higher tariffs if it tries to avoid the import duty hikes through transshipments. This is a practice that involves transferring cargo from one vessel to another while in transit to disguise that the product comes from Indonesia, thus possibly making it safe from the 32 percent tariff.

“Please understand that the 32 percent number is far less than what is needed to eliminate the trade deficit disparity we have with your country,” the businessman-turned-politician said.

With weeks-long negotiating window, Trump invited Indonesia to invest more in the US — which he called an “extraordinary economy” and the world’s “number one market.”

“As you are aware, there will be no tariff if Indonesia, or companies within your country, decide to build or manufacture products within the US, and in fact, we will do everything possible to get approvals quickly, professionally, and routinely — in other words, in a matter of weeks,” Trump said.

If Indonesia imposes retaliatory tariffs, the US will add the same level of the additional duties to the 32 percent. Trump told Prabowo that he remained open to changing his mind if Jakarta got rid of its tariff and non-tariff measures, as well as other trade barriers.

“These tariffs may be modified, upward or downward, depending on our relationship with your country,” Trump wrote before ending the letter by saying how Indonesia would “never be disappointed” with the US.

Over the past few months, Indonesia has been trying to appease Trump’s tariff wrath by offering to increase more US imports. Just last week, chief negotiator and senior minister Airlangga Hartarto revealed that Indonesia was set to ink a $34 billion memorandum of understanding (MoU) with American business partners on July 7 or Monday. The MoU would include a $15.5 billion worth of US fuel imports, as well as investment plans involving Indonesian sovereign fund Danantara and state-run enterprises. There are still no updates to this $34 billion MoU so far. Airlangga is still in Brazil to accompany Prabowo on his BRICS debut, although the former told reporters that Indonesia already had a team on standby in Washington to deal with the tariff matters.

Trump recently threatened to hike tariffs by another 10 percent against countries that aligned with BRICS’ “anti-American policies” shortly after the bloc made indirect criticism of his import tax hikes. Indonesia is a member of BRICS. The group also includes countries like Russia and the US’ top rival, China.

The US currently has a 10 percent tariff in place on Indonesian goods, although the same baseline rate also applies to other countries.