Jakarta, May 9, 2025 – Currently, the world is in various turmoils, including the trade war launched by the President of the United States (US), Donald Trump in April 2025. The additional tariffs for countries that have a trade value difference with the United States have caused pros and cons. Several countries responded to this policy by requesting negotiations or by implementing retaliatory tariffs for the United States. This has come as a surprise to the industrial sector, especially non-oil and gas manufacturing which has been part of Indonesia’s export commodities. On the other hand, the Indonesian industrial sector is facing another challenge related to meeting carbon emission standards for its products. To enter the European market in 2026, products must meet the Carbon Border Adjustment Mechanism (CBAM) standard which requires certain emission limits for each type of product.
Juniko Nur Pratama, Industrial Decarbonization Program Manager, Institute for Essential Services Reform (IESR), in the Trade War VS. webinar. Climate War: Indonesian Industry Squeezed by Two Challenges, stated that in this situation, the Indonesian Government must intervene in policies to overcome these challenges.
“Currently, it can be said to be the momentum for real improvement. Especially the improvement of industrial decarbonization policies to increase the export competitiveness of Indonesian products,” said Juniko.
This is in line with the efforts made by the Ministry of Industry which, in addition to being involved in the reciprocal tariff policy negotiation process with the United States, is also actively taking bilateral and multilateral approaches to the development of Indonesian industrial policy.
Dewi Muliana, Director of International Industrial Access, Ministry of Industry stated that currently the government is still discussing the negotiation process with the United States and considering various possibilities that will be the implications of this negotiation.
Wijayanto Samirin, Economist and Academic, Paramadina University said that the impact of the tariff war needs to be watched out for. The global economic growth projection issued by the IMF shows that Indonesia’s economic growth has the potential to decline by 0.4% due to Trump’s reciprocal tariffs, even though commodity exports to Indonesia to the United States are only 2.2% of GDP. This indicates that even though the value is relatively small, exports to the US still have a significant impact on the economy.
“A bad situation like this will force the government to issue new and innovative policies to respond to it. We must continue to monitor this so that the policies issued during this period are good and effective for the sustainability of the industry in Indonesia,” said Wijayanto.
Devi Kusumaningtyas, Head of Government and Public Affairs, Nike Southeast Asia, agreed that this momentum must be used to increase the competitiveness of Indonesian products, one of which is by integrating sustainability aspects into the production supply chain.
“The quick solution (low hanging fruit) that is right in front of our eyes is actually the use of electricity from renewable energy. However, in Indonesia, access is currently still limited only through Renewable Energy Certificates (RECs) and green energy services, but these two things are premium services. In the future, the government must make access to renewable energy electricity cheap and easy,” explained Devi.
