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24 Jul 2025

International Economy

Indonesia secures a 19-percent tariff, while having to open its market and accept comprehensive US conditions (Business Brief No.4178 Full Ed.)

คะแนนเฉลี่ย
  •  Indonesia and the US have announced a Reciprocal Trade Agreement (July 22), with key provisions including a reduction of US reciprocal tariff rate for Indonesia to 19 percent (from the original 32 percent), while Indonesia must open its market and accept various conditions proposed by the US.
  • The tariff reduction may partially alleviate the impact on Indonesia’s export sector to the US, but the positive effect on GDP may remain limited. Given this, KResearch has revised its 2025 GDP forecast for Indonesia upward to 4.8 percent (from a prior estimate of 4.5 percent based on a 32-percent reciprocal tariff rate), as exports to the US account for only 1.9 percent of Indonesia’s GDP. Meanwhile, the weak global economy and sluggish domestic purchasing power are likely to continue pressuring Indonesia’s economy for the remainder of the year.
  • Indonesia’s decision to open its market to the US may reshape its domestic competition structure, giving American products greater opportunities to expand their market share. While Thailand still maintains advantages through preferential benefits under the ASEAN Free Trade Agreement (AFTA), certain Thai products will need to brace for intensified competition, including automotive parts, diesel engines, and chemical products.
  • This deal offers Indonesian products a competitive advantage in the US market. At the same time, Thai product categories that overlap with other ASEAN countries receiving lower reciprocal tariffs may face heightened competition, such as natural rubber, rubber gloves, processed shrimp, processed fish, pet food, electrical machinery, and electrical appliances.

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International Economy