ASSESSING THE IMPACT OF US RECIPROCAL TARIFFS ON INDONESIAN TRADE BALANCE AND ECONOMIC GROWTH

The United States\' trade policies, particularly the imposition of import tariffs on Indonesian products, have significant implications for Indonesia’s trade balance and economic growth. This study examines the effects of US reciprocal tariffs on Indonesia’s export performance and trade deficit, analyzing their broader macroeconomic impact. An econometric regression approach with time-series data from 2010 to 2024 indicates that higher US import tariffs negatively affect Indonesia’s exports, exacerbating the bilateral trade deficit. The US trade deficit with Indonesia in 2025 is projected to reach US$ 28.091 billion, but reciprocal tariffs could reduce it by US$ 7.733 billion, bringing the deficit down to US$ 20.358 billion. This decline in trade balance is expected to slow Indonesia’s economic growth by 0.17%, from 5.20% to 5.03%. The study underscores the need for Indonesia to adopt strategic policy measures to mitigate the adverse effects of US trade restrictions. Key recommendations include diversifying export markets, strengthening domestic manufacturing, and enhancing trade diplomacy to ensure economic resilience. By providing empirical insights into the trade balance and growth dynamics, this research offers valuable guidance for policymakers in crafting adaptive trade strategies that safeguard Indonesia’s economic stability amid global trade uncertainties.