Tariffs Impact August Export Volume as Sales to the US Decline
Indonesia’s overall export volume to the United States experienced a noticeable 12.39 percent drop in August compared to the previous month, a decline largely attributed to the newly implemented punitive tariffs imposed by Washington.
The significant tariff hike, which saw a 19 percent duty slapped on US-bound Indonesian goods, officially took effect on August 7.
This increase came on top of an already existing 10 percent tariff that the US had been collecting on all imports from Indonesia and other trading partners since early April.
Despite the fact that the US constitutes a lion’s share of Jakarta’s overall trade surplus, the Central Statistics Agency (BPS) reported this substantial double-digit drop in August exports directed at the world’s largest economy.
M Habibullah, a deputy for statistics production at BPS, detailed the figures during a news conference on Wednesday, noting, “Our exports to the US hit $2.72 billion in August, down 12.39 percent from the previous month.”
However, he provided a crucial context by adding, “our exports actually rose 2.96 percent year-on-year [yoy],” indicating that despite the immediate monthly tariff shock, the long-term growth trajectory of the export relationship remains positive.
Habibullah also specified that Indonesia’s sales of both crude palm oil and its derivatives to the US totaled 2.56 million tons in August, though he did not disclose the monetary value of the palm oil export or provide a comparison to the previous month’s shipments.
US Remains Key Surplus Driver Despite Trade Tensions
Despite the monthly decline caused by the new tariffs and ongoing trade tensions, the United States continues to be the single most significant driver of Indonesia’s overall trade surplus, underscoring the deep economic importance of the export relationship.
The data confirms that between January and August 2025, Indonesia successfully maintained an impressive overall positive trade balance of $12.20 billion with the US.
This figure represents a healthy increase from the $9.16 billion recorded during the same eight-month period in 2024, demonstrating that the foundation of the trade relationship remains exceptionally strong.
Further enhancing this positive outlook, BPS data indicated that the non-oil and gas surplus expanded considerably, rising from $10.77 billion to $14.09 billion over the same period.
This sustained surplus performance against the US has also played a crucial role in helping Indonesia extend its remarkable 64-month streak of being in the black, a positive run that began back in May 2020.
Providing more detail on the composition of the trade, Habibullah highlighted that Indonesia’s non-oil and gas exports to the US for the January-August 2025 period reached a total of $20.60 billion.
This trade flow was heavily dominated by sales of machinery and electrical equipment, which alone accounted for a substantial $3.79 billion.
On a related note, Indonesia has been actively engaging with the US, nudging Washington to exempt palm oil, among other key commodities, from its tariff regime to safeguard the future of Indonesian export markets.
Bilateral Negotiations Shape Future Trade Landscape
The implementation of the new tariff structure was the result of complex bilateral negotiations, which ultimately saw Indonesia make significant concessions to secure a lower tariff rate on its export goods.
US President Donald Trump initially launched the tariffs against nearly all trading partners with the explicit goal of improving Washington’s pervasive trade imbalance.
The initial proposal for tariffs on Indonesian goods was an even higher 32 percent.
However, this rate was ultimately cut down to 19 percent only after Jakarta agreed to make a major concession: removing the import tax for nearly all American products entering Indonesia.
In a further exchange for the lower tariffs on its export sales, Indonesia was also compelled to make specific import commitments, including a significant pledge to buy $15 billion worth of American energy products.
The businessman-turned-politician recently spoke about the outcome of these discussions in a speech to the UN General Assembly, where he boasted that his administration had successfully negotiated a “historic” trade deal with Indonesia and other countries.
He also used the platform of the UN hall to tell world leaders that these tariffs were fundamentally necessary to defend his country’s “sovereignty and security.”
These high-stakes trade negotiations demonstrate how geopolitical and protectionist policies are now directly influencing the flow and cost of Indonesian export goods.
