^{Source: Business-Indonesia}

Indonesia Sets Sights on Balancing Trade with the U.S.

In a significant step toward improving bilateral trade relations, Indonesia is actively working to reduce — and potentially eliminate — its trade surplus with the United States, according to Finance Minister Sri Mulyani Indrawati. Her comments, made during the IMF-World Bank Spring Meetings, come amid escalating global trade pressures and fresh tariffs imposed by the U.S. on Indonesian exports.

Growing Surplus, Growing Pressure

Indonesia’s trade surplus with the U.S. reached $4.32 billion in the first quarter of 2025, a substantial increase from $3.61 billion during the same period in 2024. This makes the U.S. the largest contributor to Indonesia’s overall $10.92 billion trade surplus for Q1 2025.

While that figure may appear large, Indrawati emphasized that trade with the U.S. represents less than 2% of Indonesia’s GDP. In comparison, total exports account for about 20% of the nation’s GDP. “So, it’s not a dominant factor,” she said, “but it’s significant enough to address diplomatically.”

Tariffs and Trade Talks: The Trump Effect

The push for a more balanced trade relationship follows a new 32% tariff levied on Indonesian exports by former President Donald Trump on April 2, 2025. Although that tariff has since been temporarily reduced to 10% under a 90-day pause, it’s clear that Indonesia is feeling the economic pressure and is ready to act.

Indrawati admitted that Indonesia has faced criticism for using non-tariff barriers, including complex customs procedures and restrictive taxation policies, which may have contributed to the trade imbalance. As a result, the country is now taking a more open approach.

Diversifying Imports: Agriculture and Energy

To address the imbalance, Indonesia plans to import more U.S. agricultural commodities, including wheat, soybeans, and corn. These imports would not only help reduce the surplus but also diversify the country’s food supply chain and reduce dependency on other global suppliers.

The minister also hinted at broader energy imports from the U.S., particularly liquefied natural gas (LNG). With Indonesia’s domestic energy production falling short of demand, especially in the industrial and power sectors, energy imports are seen as a necessary strategic move.

“We are open to exploring more options,” Indrawati noted. “Whether it’s agriculture or energy, we see value in strengthening these areas of trade with the U.S.”

Currency Stability a Top Priority

Meanwhile, Bank Indonesia is laser-focused on defending the rupiah’s stability amid the global uncertainty triggered by tariffs and geopolitical shifts.

The central bank recently held its benchmark 7-day reverse repurchase rate steady at 5.75%, marking its third consecutive pause. This move, expected by 24 out of 26 economists surveyed by Reuters, is designed to shield the Indonesian rupiah from further depreciation and capital flight.

Earlier this month, the rupiah fell to a record low, trading at 16,800 against the dollar, while the Jakarta Composite Index took a hit as investors reacted to the escalating trade tensions.

“We’re prioritizing exchange rate stability right now,” said BI Governor Perry Warjiyo. “Once that’s secure, we’ll have the flexibility to evaluate interest rate cuts based on inflation and economic growth.”

Looking Ahead: Balancing Trade and Stability

Indonesia’s approach to trade and monetary policy demonstrates a multi-pronged strategy — one that aims to manage external pressure while safeguarding internal economic health.

By increasing imports from the U.S. and holding firm on interest rates, the country is navigating a challenging global landscape with a calculated, diplomatic, and forward-looking plan. If successful, this move could not only ease trade tensions but also position Indonesia as a more attractive and cooperative partner on the world stage.

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