Surabaya – The 32% import tariff imposed by the Donald Trump administration on Indonesian products is seen as a significant opportunity for Indonesia, particularly for East Java.

Chairman of the East Java Provincial Chamber of Commerce and Industry (Kadin), Adik Dwi Putranto, noted that although the policy poses a serious threat to Indonesia’s key export sectors, it also positions Indonesia as more competitive than many of its regional rivals.

According to Adik, core sectors such as textiles, footwear, electronics, and furniture—pillars of East Java’s economy—are indeed at risk of direct impact. This is especially concerning given Indonesia’s substantial dependence on the U.S. market, with 61.4% of clothing exports and 33.8% of footwear exports destined for the United States.

The tariff policy is also projected to shrink Indonesia’s GDP by 0.5% and could cause the rupiah to weaken to IDR 17,217 per U.S. dollar.

“As Indonesia’s second-largest manufacturing hub, East Java is on the front lines. Thousands of textile factories in Surabaya, Sidoarjo, and Gresik—as well as footwear centers in Mojokerto and furniture producers in Pasuruan-Malang—face the risk of losing access to the U.S. market. Without swift mitigation, a wave of layoffs could ripple through SMEs and local banking sectors,” Adik warned in Surabaya on Tuesday (July 8, 2025).

Indonesia’s Lower Tariff Burden Presents Strategic Advantages

Compared to Vietnam (46%), Bangladesh (37%), and Thailand (36%), Indonesia’s 32% tariff burden is relatively lower, making its products more competitive in the U.S. market.

This situation could trigger a shift in demand worth billions of U.S. dollars, as American companies seek more cost-effective suppliers.

Adik expressed confidence that East Java is well-positioned to seize this opportunity. With the support of international ports like Tanjung Perak and Manyar in Gresik—both of which help reduce production and logistics costs—he emphasized the need for accelerated policy support and improvements in product quality.

“If fully leveraged, East Java’s exports could soar significantly. We estimate an additional $2–3 billion in export potential from Vietnam’s market share, $800 million–1.2 billion from Bangladesh, and $500–800 million from Thailand. In a best-case scenario, Indonesia could rise from the fifth to the third-largest textile exporter to the U.S., with East Java as the main driver,” he stated optimistically.

Challenges Still Lie Ahead

Malaysia, which is subject to a lower 25% tariff, could emerge as a strong competitor in the electronics sector. For this reason, swift action and a well-targeted strategy are essential.

Adik emphasized that there are three key pillars to ensure East Java capitalizes on this momentum: accelerating industrial policy, improving product quality and efficiency, and staying attuned to global market dynamics.

“The Trump tariffs are a heavy blow to Asia, but for East Java, they could be a turning point. We’re not just aiming to survive—this could be the rise of a new industrial powerhouse. With the right strategy, East Java can emerge as a winner,” he asserted.

“This is a rare opportunity. If we move quickly, East Java could become Asia’s next major export hub,” Adik concluded.