Indonesian government considers Tariffs on chinese imports amid local manufacturing crisis

Jakarta: Indonesian local manufacturers, particularly in the garment industry, are facing severe challenges due to a surge of low-cost Chinese products flooding the market. The influx of these goods has significantly impacted domestic producers, leading to widespread concerns about job losses and factory closures.

Garment makers, including both small home-based workers and larger factories, have voiced their distress over losing market share to inexpensive apparel and textiles imported from China. The situation has been exacerbated by a rise in online purchases of these products, further undermining local businesses. In response to growing unrest, including protests by workers in Jakarta, Trade Minister Zulkifli Hasan announced in July that the government is preparing to impose import tariffs of up to 200 percent on certain Chinese products. These tariffs would target textiles, clothing, footwear, electronics, ceramics, and cosmetics in an effort to protect local industries and prevent further layoffs.

Zulkifli emphasized that Indonesia has the right to implement these measures, drawing parallels to similar actions taken by the United States, which has imposed tariffs of up to 200 percent on imported goods like ceramics and clothing. He stressed the need to ensure that micro, small, and medium-sized enterprises, as well as larger industries, can survive and continue to thrive amidst the challenges posed by foreign competition.

However, the move to impose higher tariffs is not without risk. China is Indonesia's largest trading partner, with bilateral trade exceeding $127 billion in 2023. The potential for Chinese retaliation is a significant concern, though it could also lead to increased Chinese investment in Indonesian factories.

In response to the escalating crisis, the Indonesian government announced the formation of a special task force in July to monitor and address issues related to specific imports. The urgency of the situation is clear, as the wave of Chinese products has already led to the closure of at least 12 textile factories between January and July 2024, resulting in the loss of over 12,000 jobs, according to the Nusantara Trade Union Confederation.