Indonesia adjusts crude palm oil export duties to counter US tariffs

Sri Mulyani announces tariff and tax reforms to reduce burden from US import duties.

President Prabowo Subianto (left) speaks with Finance Minister Sri Mulyani (right) during the Joint Economic Discussion at the Assembly Hall, Menara Mandiri in Jakarta on Tuesday, April 8, 2025. Photo by Fauza Syahputra/Katadata

By Anna Fadiah and Hayu Andini

Indonesia adjusts crude palm oil export duties to counter US tariffs, marking a significant policy shift aimed at reducing the financial burden caused by new trade restrictions from the United States. Finance Minister Sri Mulyani Indrawati made the announcement during the Joint Economic Discussion with President Prabowo Subianto at Menara Mandiri in Jakarta on Tuesday, April 8.

The government is responding to the imposition of a steep 32% import tariff by US President Donald Trump on Indonesian goods. The move, which affects a wide range of exports including crude palm oil (CPO), has prompted Indonesia to rethink its current levy structure and overall trade strategy. At the moment, Indonesia levies up to US$288 per ton on CPO exports, depending on reference prices. There is also a separate export levy applied to the commodity.

Sri Mulyani said the government will recalibrate CPO export duties, which currently range between 0% and 25%. “Export duties for CPO will also be adjusted. This is equivalent to a reduction in burden of up to 5%,” she explained.

This recalibration is part of a broader effort to support Indonesian exporters and ensure they remain competitive despite international trade pressures. The policy change aligns with a series of ongoing reforms designed to strengthen Indonesia’s position in the global commodities market—particularly in palm oil, one of its most important exports.

Government intensifies trade defense measures

Beyond adjusting export duties, the Indonesian government plans to fast-track the implementation of trade defense instruments, including anti-dumping duties and safeguard measures. According to Sri Mulyani, these actions are meant to protect Indonesian CPO and other key exports from unfair trade practices and price distortions in the international market.

"The anti-dumping and safeguard duties can be accelerated in just 15 days," she noted. "We will do this together with other ministries and institutions."

Speeding up these protective measures is a key strategy for ensuring that Indonesian palm oil continues to enjoy access to global markets under fair and transparent conditions. It also signals the government’s intent to act quickly and decisively when faced with protectionist policies from other nations.

Tax and customs reforms to cut costs for exporters

Another pillar of the government’s strategy is tax and customs reform. Sri Mulyani emphasized the need to streamline administrative processes in order to reduce the cost burden on Indonesian businesses. By simplifying procedures, the government hopes to shave off 2% from the overall tariff impact.

"This is a change that we can make in tax and customs from the administrative side," she said. "This simplification will reduce the burden. So, if the business world is subject to a 32% tariff (from the US), this can be reduced to 2% lower."

The goal is to bring the effective tariff burden down to around 30% through administrative efficiency alone. In combination with adjusted export duties and faster deployment of trade protection instruments, the reform package represents a comprehensive effort to shield Indonesian exporters from external shocks.

Lowering import income tax to increase competitiveness

In addition to the measures already discussed, the Indonesian government is also reviewing the import income tax (PPh) rates. The plan includes a reduction in the PPh rate for goods entering Indonesia, with the aim of increasing trade flexibility and improving bilateral relations with the United States.

Although specific figures for the PPh reduction were not detailed during the meeting, the general objective is clear: to ease the financial strain on both importers and exporters and create a more favorable trade environment overall.

This multi-layered approach underscores Indonesia’s commitment to playing an active and adaptive role in global trade. Rather than resort to retaliatory tariffs, the government is focused on targeted policy reforms and practical adjustments to ensure sustainable growth.

Maintaining Indonesia’s edge in palm oil exports

Indonesia is the world’s largest producer and exporter of crude palm oil, and the industry contributes significantly to national revenue and employment. The government’s decision to adjust CPO export duties is not just a response to US trade actions—it’s also part of a broader effort to maintain the country’s dominance in the palm oil sector.

By offering more competitive rates and responding swiftly to global market developments, Indonesia aims to keep its palm oil products attractive to foreign buyers. This is particularly crucial as the country faces growing competition from neighboring producers like Malaysia and Thailand.

Sri Mulyani pointed out that Indonesia still has room to maneuver due to its diverse market access and relatively low export dependency on any single country. “With a small surplus and low dependency, Indonesia is in a better position to adapt its trade strategy,” she said.

Strategic outlook: Diversification and diplomacy

While the immediate focus is on mitigating the effects of the 32% tariff from the US, Indonesia’s broader trade strategy involves diversification and diplomacy. The country is actively seeking to expand its market reach, particularly in Africa, South Asia, and the Middle East.

At the same time, diplomatic engagement with the United States remains a priority. By demonstrating flexibility in policy and willingness to reform, Indonesia hopes to foster more constructive trade relations with Washington under current and future administrations.

The presence of both President Prabowo Subianto and Finance Minister Sri Mulyani at the policy discussion signals that these reforms enjoy high-level political backing. It also suggests that the government views trade policy not just as an economic issue, but as a vital component of its foreign affairs and national development agenda.

Indonesia adjusts crude palm oil export duties to counter US tariffs as part of a comprehensive, multi-pronged trade policy. With changes to TKDN, tax and customs reform, accelerated trade protections, and recalibrated export levies, the government aims to ease the burden on exporters and maintain global competitiveness.

Sri Mulyani’s remarks underline Indonesia’s proactive stance amid global economic turbulence. Rather than retreating, the country is choosing to reform, adapt, and engage. For Indonesian businesses and international trade partners alike, these adjustments signal a clear intent to stay resilient, agile, and economically forward-looking.