Is Indonesia Really Losing from the US–China Trade War? A Data-Driven Economic Analysis
Is Indonesia Really Losing from the US–China Trade War? A Data-Driven Economic Analysis
For months, headlines and public debates have claimed that Indonesia is suffering massive losses due to the United States–China trade war and the imposition of 19% import tariffs by the United States. Some commentators even warned that a weakening rupiah and rising tariffs would push Indonesia toward economic collapse.
But does the data actually support these claims?
This article examines Indonesia’s trade performance, currency dynamics, and export strategy using economic fundamentals, not fear-based narratives.
Understanding the 19% US Tariff on Indonesian Goods
In 2025, the United States implemented a 19% import tariff on selected Indonesian products as part of its broader trade policy adjustments. At first glance, higher tariffs appear harmful, as they increase the cost of Indonesian exports in the US market.
However, tariffs alone do not determine trade outcomes. What truly matters is whether a country can maintain:
Export competitiveness
Strong global demand
Favorable exchange rate dynamics
Indonesia’s experience shows that these factors remain intact.
Indonesia’s Trade Surplus Tells a Different Story
Contrary to predictions of economic decline, Indonesia’s trade balance improved significantly after the tariff implementation.
Key Trade Balance Data:
2024 Trade Surplus: ~IDR 400 trillion
2025 Trade Surplus: ~IDR 650 trillion
Growth: Over 30% year-on-year increase
If tariffs were truly damaging Indonesia’s economy, the trade surplus would have declined. Instead, exports continued to outpace imports—clear evidence of resilience and competitiveness.
Why a Weaker Rupiah Can Benefit Export-Oriented Economies
Indonesia’s currency weakened toward IDR 17,000 per USD, which triggered widespread concern. Yet from an economic perspective, a moderately weaker currency can be advantageous for export-driven countries.
Positive Effects of a Weaker Rupiah:
Indonesian goods become cheaper in global markets
Export volumes increase
Export revenues in rupiah terms rise
Domestic industries gain pricing advantages
For example, when export revenues are earned in US dollars, a weaker rupiah translates into higher rupiah income, improving profitability for exporters.
Export Growth vs Import Costs: The Trade-Off
While currency depreciation increases export competitiveness, it also raises the cost of imports—especially raw materials and energy. This creates short-term pressure on industries dependent on imported inputs.
However, Indonesia has begun addressing this issue by:
Encouraging local substitution for imports
Strengthening domestic manufacturing
Expanding downstream processing industries
Over time, this shift reduces reliance on imports and strengthens economic self-sufficiency.
Learning from Vietnam and China’s Export Strategy
Indonesia is not alone in using export-oriented growth supported by competitive exchange rates.
Vietnam has consistently allowed its currency to weaken gradually, contributing to trade surpluses exceeding IDR 2,500 trillion
China has followed a similar strategy for decades, building massive export dominance and industrial capacity
These countries demonstrate that controlled currency management, combined with industrial policy, can accelerate economic growth.
Energy Independence: A Key Long-Term Advantage
One critical challenge remains Indonesia’s dependence on imported energy. However, initiatives such as biodiesel blending programs (B40 and B50) aim to reduce oil imports significantly.
Estimated benefits include:
Tens of billions of USD in foreign exchange savings
Reduced trade deficits in oil and gas
Increased demand for domestic palm oil production
Energy self-sufficiency strengthens trade balance stability and protects the economy from external shocks.
Why Stability Matters More Than Currency Strength
The real risk for Indonesia is not a weaker currency, but uncontrolled volatility. Gradual, managed depreciation allows businesses to adapt and plan effectively, while sudden swings can disrupt production and investment.
A balanced approach ensures:
Export competitiveness
Industrial stability
Investor confidence
Conclusion: Indonesia Is Not Collapsing—It Is Transforming
Despite alarming narratives, Indonesia has proven to be a net exporter with increasing trade surpluses, even amid global trade tensions. The 19% US tariff did not weaken Indonesia’s economy; instead, it highlighted the importance of:
Export-oriented growth
Currency competitiveness
Industrial resilience
With strategic policy alignment, Indonesia has the potential to achieve sustained economic growth above 8%, following the successful export-driven models of other Asian economies.
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