NEWS & CSR

Indonesia’s Textile and Garment Industry Under Pressure: 19% U.S. Tariffs vs. 0% Import Access

27 Jul 2025 | 49 Views | News Category: -

Summary of the Indo‑US Tariff Deal

In mid‑July 2025, President Donald Trump announced a trade agreement with Indonesia: Indonesian textile and garment exports to the US will face a 19% tariff, while US goods entering Indonesia will enjoy 0% duty. This move forms part of US “tariff diplomacy” aimed at rebalancing trade and securing market access.

Impact on Textile and Garment Exports

Indonesia exported approximately US$ 28 billion of textiles to the US in 2024, including apparel, footwear, and accessories. Raising tariffs from 10% to 19% is expected to increase costs for US importers and weaken Indonesian products’ price competitiveness in America. Garment factories in Bandung and Surabaya report contract reviews, order delays, and heightened discount demands.

Opportunities and Challenges for Industry Players

Production Costs & Thin Margins – A 19% tariff may squeeze margins for garment factories and Indonesian spinning yarn manufacturers, which often operate at 1–2% net margins .
Market Diversification – Exporters are pivoting toward Europe, MENA, and East Asia, where tariffs remain stable. Keyword: “greige fabric supplier for European brands.”
0% Duty on US Imports – Tariff‑free access to US machinery, specialized inputs, and manufacturing technology opens avenues for plant modernization and efficiency gains, including DMC machines and predictive maintenance systems.

Expert and Industry Perspectives

SupplyChainBrain analysts note that 0% duty on US imports could cut capital expenditure on new equipment by up to 15%, accelerating green technology and automation adoption. Bloomberg reports that President Prabowo Subianto hailed the deal as ushering in a “new era of mutual benefit”. Meanwhile, the EU is preparing retaliatory tariffs on US goods, introducing fresh uncertainty into global supply chains.

Action Plan for Businesses

Review Export Contracts – Renegotiate existing agreements and include tariff adjustment clauses.
Upgrade Facilities – Leverage 0% duty to import US‑made machines and parts for production line automation.
Optimize Supply Chains – Combine local raw materials with tariff‑free imports to minimize input costs.

Sources:

“Indonesia Trade Deal Includes High Tariffs, Trump Says,” Investopedia, July 16 2025 (Investopedia)
“Trump announces trade deal with Indonesia,” Politico, July 15 2025 (Politico)
“Prabowo Confirms US to Impose 19% Tariff on Indonesian Goods,” Bloomberg, July 16 2025 (Bloomberg.com)
“U.S. and Indonesia Reach Trade Agreement,” SupplyChainBrain, July 16 2025 (SupplyChainBrain)

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