Section 301 Findings May Push US Tariffs on Indonesia to 18%
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- Indonesia may face US tariffs of up to 18 percent following a Section 301 investigation, with phased measures linked to forced labor and structural capacity concerns.
- Despite the potential increase, Indonesia is considered relatively well-positioned due to its commitments to addressing forced labor issues compared to other trading partners.
- These trade measures form part of a broader US strategy and may also influence Indonesia’s ongoing efforts to join the OECD.
Jakarta — The Indonesian government projects that additional tariffs imposed by the United States on its exports could reach 18 percent by the end of an ongoing trade investigation under Section 301 of the Trade Act of 1974.
Secretary at the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso, said in Jakarta on Saturday that Indonesia is currently subject to a temporary tariff of 10 percent, which will remain in effect until July 24, 2026.
Following the expiration of the temporary measure, the tariff structure is expected to be implemented in stages. The first component will consist of a 10 percent tariff linked to concerns over forced labor. Several weeks later, the US is expected to introduce an additional tariff component tied to structural excess capacity.
Through a stacking mechanism that combines these tariff components—alongside agreed exclusions for certain products—the final tariff level for Indonesia is projected to settle at around 18 percent.
“This figure represents the target outcome at the end of the process, while also ensuring clarity and continuity in its implementation,” Susiwijono said.
However, he emphasized that the final tariff level remains contingent on the completion of legal and administrative procedures in the United States. Authorities there will still open a public comment period and hold further hearings before fully enforcing the policy.
Susiwijono noted that Indonesia is in a relatively favorable position in the preliminary findings of the Section 301 investigation conducted by the Office of the United States Trade Representative (USTR).
According to the USTR report, Indonesia is among a small group of countries that have submitted commitments related to addressing forced labor concerns, placing it ahead of many other trading partners.
The US government has also expressed its intention to exempt certain tariff lines in line with agreements reached between the two countries. One mechanism currently under development includes a special scheme for the textile sector.
“The resolution of the structural excess capacity component is expected to follow several weeks after the temporary tariff expires on July 24, undergoing a similar process,” he added.
Furthermore, Susiwijono stated that the outcome of the Section 301 investigation forms part of a broader bilateral trade framework between Indonesia and the United States.
Several commitments agreed upon by both countries are also seen as supporting Indonesia’s bid to join the Organisation for Economic Co-operation and Development (OECD).
As outlined in the document titled 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 listed among six economies deemed not to have effectively enforced bans on imports of goods produced using forced labor.
The other economies include Canada, Ecuador, the European Union, Mexico, and Pakistan.
Based on this assessment, the USTR has proposed an additional 10 percent tariff on Indonesia. Meanwhile, 54 other economies that lack formal prohibitions on forced labor imports could face higher tariffs of up to 12.5 percent.
The investigation covers 60 major US trading partners and serves as one of the instruments used by President Donald Trump’s administration to sustain tariff-based trade policies after some earlier measures encountered domestic legal challenges.
Indonesianpost.com | Antara
