Jakarta, July 16, 2025 — President Prabowo Subianto and U.S. President Donald Trump have reached an agreement to reduce proposed U.S. import tariffs on Indonesian goods from 32% to 19%. As part of the deal, Indonesia has committed to purchasing USD15 billion worth of energy products, USD4.5 billion in agricultural goods, and 50 units of Boeing’s latest aircraft.
Gundy Cahyadi, Research Director at the Prasasti Center for Policy Studies, emphasized that this development should be viewed within a broader context. “Trump-style tariffs are more political theater than serious long-term policy. Global financial markets have grown accustomed to this brand of political showmanship,” he said.
As an example, Gundy noted that following Liberation Day in April, global market volatility surged, with the VIX index hitting its highest level since the pandemic. Yet by July, market reactions had eased. “Investors tend to see tariff threats as part of a familiar pattern: dramatic gestures in public, quiet negotiations behind the scenes.”
Gundy further highlighted that Indonesia’s economy is far less dependent on exports compared to its ASEAN peers. “Exports to the U.S. account for only around 10% of Indonesia’s total exports. With total exports last year valued at USD290 billion, even in a worst-case scenario where U.S. market access is completely shut off, the impact would be about USD29 billion—roughly 2% of GDP. Noticeable, yes, but hardly enough to shake the foundations of the economy.”
According to Gundy, Indonesia’s main focus should remain on boosting investment. “President Prabowo’s efforts to strengthen international partnerships deserve recognition. Indonesia has been forging strategic ties with a range of countries, including joining BRICS earlier this year.”
He added, “The President’s decision to attend the BRICS Summit despite pressure from President Trump reflects Indonesia’s consistent foreign policy direction: broadening partnerships, strengthening its position, and maintaining resolve. If Trump brings the drama, Jakarta is writing its own script—one focused on long-term economic resilience.”