Government Proposes RI Tariffs to 18 Percent After Negotiations with the US

ILLUSTRATION BETWEEN

JAKARTA - The government projects that the additional tariffs that the United States (US) will impose on Indonesian products will reach 18 percent at the end of the Section 301 Trade Act of 1974 trade investigation process.

The Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso, explained that Indonesia is currently subject to a temporary tariff of 10 percent which is valid until July 24, 2026.

After the expiration, the tariff structure will be applied gradually. The first component is a tariff related to forced labor of 10 percent. Then a few weeks later, the US plans to add a tariff component related to structural excess capacity.

Through the stacking mechanism of various components of the tariff, accompanied by exclusions for a number of products agreed upon by the two countries, the final tariff for Indonesia is projected to be at the level of 18 percent.

"This figure is a target that we want to achieve at the end of the process, as well as ensuring clarity and continuity in its implementation," said Susiwijono as quoted by ANTARA, Saturday, June 6.

However, he emphasized that the amount of the tariff still depends on the completion of legal and administrative processes in the US. The US government will still open an additional comment period (comment period) and hold a follow-up hearing before the tariff policy is fully implemented.

Susiwijono assessed that Indonesia obtained a relatively more advantageous position in the provisional results of the Section 301 investigation conducted by the US Trade Representative Office (USTR).

Based on the report released by the USTR, Indonesia is in a small group of countries that have expressed commitments regarding the issue of forced labor. This position is considered better than many other trading partners.

The US government also expressed its commitment to exempt a number of tariff posts in accordance with the agreement reached by the two countries. One of the mechanisms being developed is a special scheme for the textile sector.

"The completion of the excess structural capacity component is expected to follow in a few weeks after the end of the temporary tariff on July 24, by going through a similar process," he said.

Susiwijono explained that the results of the Section 301 investigation are part of a broader bilateral trade cooperation framework between Indonesia and the US.

A number of commitments agreed by the two countries are also considered to support Indonesia's accession process to the Organization for Economic Cooperation and Development (OECD).

As is known, in the document entitled Acts, Policies, and Practices of Various Economies Related to the Failure to Impose and Effectively Enforce a Prohibition on the Importation of Goods Produced with Forced Labor, Indonesia is included in a group of six economies that are considered not to have effectively enforced the prohibition on the import of goods produced using forced labor.

In addition to Indonesia, there are a number of other countries that include Canada, Ecuador, the European Union, Mexico, and Pakistan.

Based on this assessment, the USTR proposed imposing an additional tariff of 10 percent on Indonesia. Meanwhile, as many as 54 other countries that were judged to not have rules prohibiting the import of forced labor goods were threatened with higher additional tariffs of 12.5 percent.

The investigation was conducted on 60 major trading partners of the US and became one of the instruments used by the government of President Donald Trump to maintain trade tariff policies after some of the previous policies faced domestic legal obstacles.