Indonesian manufacturers target new markets as US tariffs hit exports

• Indonesian manufacturers seek new markets after the U.S. imposed a 32% tariff.
• Indonesian manufacturers shift their focus to Europe, Southeast Asia, and the local market.
• Textile exports may drop 30%; Southeast Asia is seen as a high-potential market.

Indonesian manufacturers are urgently exploring new export markets following the U.S. imposition of a 32% tariff on their goods last month. The nation is actively discussing US President Donald Trump’s proposed punitive tariffs, which are on hold until July.

Many Indonesian manufacturers are now focusing on Europe and Southeast Asia after being dependent on the American market, while others are trying to find ways to access their country's sizable internal market.

Due to a combination of declining domestic consumption, the effects of new US import tariffs, and a decline in global demand, Indonesia's manufacturing sector had a significant contraction in April, reaching its lowest level since the COVID-19 epidemic.

Also Read: Indonesia's April PMI Falls to 46.7; Industry Confidence Wanes

One of the top integrated textile manufacturers in the nation, PT Sipatex Putri Lestari, is one of several companies in the sector that have been severely impacted by the decline in demand brought on by the flood of low-cost imports.

The company, which is headquartered in Bandung in the West Java state of Indonesia, recently laid off 300 employees and plans to fire another 100.

“Now we have to look for, think about, or innovate something that is not found in imported goods,” said David Leonardi, Director of Operations, PT Sipatex Putri Lestari.

Sipatex stated that despite the difficulties, it is maintaining its attention on the home market and adjusting to the shifting demands of its customers. In order to increase efficiency, it also intends to replace over 500 aging devices by 2030.

Indonesian textile producers, whose exports totaled US$4.6 billion last year, are highly dependent on the US market. However, the Indonesian Textile Association said that following the US's announcement of high tariffs to correct trade imbalances, demand might decline by as much as 30%.

“Southeast Asia and its surrounding regions are areas with very high market potential,” said Danang Girindrawardana, the association’s executive director.