At the start of 2025, the United States government introduced a new 32% tariff on Indonesian exports, particularly affecting textiles, paper, and processed rubber goods. This move is seen as part of their trade protectionism policy to defend domestic industries from global competition. For Indonesian businesses, this isn’t just an economic blow, but also a complex legal challenge.
So how should Indonesian exporters respond to the tariff on Indonesian exports? What legal strategies can help minimize the impact and keep business running? In this article, we explore the legal side of this policy and the strategic options available to exporters.
Understanding the Legal Basis: WTO vs. National Policy
The 32% tariff is based on Section 301 of the U.S. Trade Act of 1974, which gives the U.S. authority to impose additional duties on countries suspected of unfair trade practices. However, policies like this often spark international controversy, as they may conflict with the non-discrimination principle of the World Trade Organization (WTO).
According to International Trade Law by Joost Pauwelyn, WTO members do have the right to protect their markets, but any measures taken must be proportional and non-discriminatory. If Indonesian exporters or the government believe the tariff is unfair, they can raise a case through the WTO’s Dispute Settlement Body (DSB).
The Immediate Impact on Indonesian Exporters
This 32% tariff will significantly increase the price of Indonesian goods in the U.S. market. Some of the direct consequences include:
- Lower competitiveness compared to other countries like Vietnam or Bangladesh
- Canceled contracts or forced price renegotiations
- Decrease in export volume and profit margins
Exporters might also face higher logistics costs and stricter documentation requirements. These challenges go beyond economics and could trigger legal issues, especially in international trade agreements.
Legal Strategies Businesses Can Take
- Review and Revise Export Contracts
Exporters should immediately review their contract terms, focusing on:
- Force Majeure (can the tariff be treated as a force majeure event?)
- Hardship Clauses (is there a significant economic change that justifies renegotiation?)
- Choice of Law and Dispute Resolution (which law applies and where will disputes be resolved?)
International Commercial Contracts by Jan Ramberg (ICC Publication) recommends building flexibility into contracts to handle protectionist risks.
- Diversify Markets and Products
Therefore, consider redirecting exports to more trade-friendly regions like the EU or East Asia. Additionally, diversifying product lines to focus on untariffed goods can also reduce exposure.
- Consult with Trade Lawyers and Customs Experts
Legal assistance is crucial. Seek advice from trade lawyers familiar with WTO rules, bilateral trade agreements, and dispute resolution procedures.
- Collaborate with Industry Associations and Government Bodies
Exporters can collectively advocate through groups like the Indonesian Exporters Association or KADIN, and coordinate with the Ministry of Trade or Foreign Affairs to encourage G2G (government-to-government) negotiations.
- Preparing for Future Legal Risks
This tariff might lead to tighter scrutiny, including investigations into:
- Dumping practices
- Intellectual property violations
- Hidden subsidies
Businesses need to strengthen:
- Export documentation and Rules of Origin
- Compliance with product and environmental standards
- Transparency in the supply chain
Proper documentation and legal compliance are key to preventing trade disputes.
Conclusion: Building Legal Resilience
Although the U.S. tariff is clearly a setback for Indonesian exporters, it also presents an opportunity to adopt smarter, proactive legal strategies. Instead of simply waiting and reacting, businesses need to start mitigating legal risks, reviewing contracts, and expanding their market reach.
In fact, in today’s global trade landscape—which is increasingly political and unpredictable—the law is not just a shield; rather, it’s a strategic asset. With the right legal approach, Indonesian businesses can not only survive, but also thrive in the face of international pressure.