Indonesia’s Textiles Exporters Brace for Trump’s Trade War
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US President Donald Trump has warned that he may revoke special trade tariffs for Indonesia, especially on textiles, in a bid to reduce his country’s trade deficit, an official said on Thursday (05/07).
The United States was Indonesia’s second-largest export destination last year, at 11 percent of total exports, or $17 billion. Indonesia enjoyed a surplus of $9.59 billion.
“[Trump] is now doing as he wishes, including to us. He has warned us that we cannot export more than the United States. He has warned that there are several special tariff arrangements that will be revoked, especially on textiles,” Sofjan Wanandi, chief advisor to Vice President Jusuf Kalla, said during a discussion on Thursday (05/07).
Indonesia exported textile products, both knitted and unknitted, worth a total of $4.12 billion to the United States last year.
According to Industry Ministry data, the United States currently imposes import tariffs of between 5 percent and 20 percent on Indonesian textile products, while there are no tariffs on textile imports from Vietnam.
Sofjan, who recently visited the United States to meet with officials, said it is uncertain what Trump will do in the near future as “no one understands what he actually wants,” he said.
According to Sofjan, who is also advisory board chairman at the Employer’s Association of Indonesia (Apindo), the US economy is currently thriving, which enables Trump to create and change trade policies as he considers most beneficial.
“We don’t know when Trump will start the trade war; maybe tomorrow, maybe never,” Sofjan said.
Retaliation
“no one understands what he actually wants,”
Ade Sudrajat, chairman of the Indonesian Textile Association (API), emphasized that Southeast Asia’s largest economy needs to retaliate soon if a higher tariff is enforced.
“If [a higher tariff] is imposed, it will be a huge obstacle for the textile industry, so it must be countered. If we keep quiet, then we become the losers,” Ade said, adding that Indonesia’s large imports of agricultural products from the United States could be used as a bargaining chip.
Indonesia imported agricultural products worth $1.27 billion – mainly seed oil, fruits and medicinal plants – from the United States last year, followed by equipment and machinery, animal feeds and cotton.
Indonesian textile exports rose 4.4 percent to $12.4 billion last year, exceeding the API’s target of $11.8 billion and the Industry Ministry’s $12 billion.
The ministry has set a textile export target of $13.5 billion for this year and $15 billion for next year.
The number of people employed in the textile industry increased 17 percent last year to 2.73 million, compared with 3.3 million in the processed food and drinks industry and 3 million in the automotive industry. The ministry seeks to increase the number of people employed in the textile industry to 2.95 million this year and 3.11 million next year.
According to the Trade Ministry, total investment in the nation’s textile industry amounted to Rp 10.9 trillion ($758 million) in 2017. Indonesia produced about 2 percent of the world’s textile supply, which earned the country $11.87 billion in foreign exchange.
“It will be unfair for us if the textile industry is targeted and the government prefers to do nothing,” said Ade of the API.
Questions & Answers
Q.Which Indonesian official warned about potential US tariff revocations on textiles?
Which Indonesian official warned about potential US tariff revocations on textiles?
Sofjan Wanandi, chief advisor to Vice President Jusuf Kalla, stated that US President Donald Trump has warned of revoking special tariff arrangements, particularly affecting Indonesian textile exports. He shared this during a discussion on Thursday (05/07).
Q.What is the current tariff range the US imposes on Indonesian textile products?
What is the current tariff range the US imposes on Indonesian textile products?
The United States currently imposes import tariffs on Indonesian textile products ranging from 5 percent to 20 percent. In contrast, there are no tariffs on textile imports from Vietnam, according to Industry Ministry data.
Q.How much did Indonesia export in textile products to the United States last year?
How much did Indonesia export in textile products to the United States last year?
Indonesia exported textile products, including both knitted and unknitted items, worth a total of $4.12 billion to the United States last year. This formed part of the $17 billion in total exports to the US.
Q.What potential bargaining chip might Indonesia use if higher US tariffs are enforced?
What potential bargaining chip might Indonesia use if higher US tariffs are enforced?
Indonesia could use its large imports of agricultural products from the United States as a bargaining chip. Last year, Indonesia imported $1.27 billion in agricultural products, primarily seed oil, fruits, and medicinal plants.
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