Indonesian footwear manufacturers cut costs, prices
Analyst says Trump tariffs to lead to increase in layoffs by industries
JAKARTA, Indonesia (MNTV) – Exporters across Indonesia are starting to feel the effects of Donald Trump’s reciprocal tariffs, reports China Global Television Network (CGTN).
One local shoe producer is having to reduce prices by 15 percent to offset the 32% import tariff in the US.
Indonesia manufactured and exported roughly $2.4 billion worth of footwear products to the US in 2023. The recent 32 percent tariff slapped on Indonesian imports is worrying local businesses.
Because of US tariffs, customers are asking for goods to be shipped earlier. There are also talks focused on reducing prices by 15 percent.
Businesses are now cutting production and operation costs as they brace for more uncertainty.
EDWIN TANJUNG, Head Merchandiser, Aggiomultimex International Group, said, “If the tariffs stay the same, this will put a burden on the footwear industry. We know that the American market is huge, with a large population and their purchasing power.”
One expert said layoffs are inevitable. FITHRA FAISAL, Chief Economist, Samuel Sekuritas Indonesia, said, “Without the Trump Tariffs, we are expecting 200,000 people to be laid off this year. Maybe with this tariff ongoing we can have an additional 50,000 people.”
That’s a big jump from the previous year’s 94-thousand layoffs.
TANJUNG said, “We are hoping to get potential customers that plan to relocate their factory here to Indonesia from Vietnam and Cambodia – which has a slightly higher tariff.”
Analysts believe that most ASEAN countries are not ready to have a trade war and are unwilling to retaliate. Engaging in negotiations however, may be a viable option.
FAISAL said, “Because this is reciprocal tariffs, reciprocity means that we can also sell them more of our textiles or crude palm oils at the expense of our importing their defense equipment, soybeans, wheat.”
The Indonesian Government says it will continue to negotiate with the United States with hopes of reducing or even removing tariffs and other trade barriers.
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