When President Donald Trump reintroduced a new 19% import tariff on a range of Indonesian export products, public reactions in Indonesia were mixed. For some in the business sector, this was considered a relief compared to the earlier threat of a 32 percent tariff. The Indonesian government, in an attempt to avoid the maximum rate, agreed to a number of concessions, including reopening market access for US agricultural products worth USD 4.5 billion, energy imports worth USD 15 billion, and committing to purchase 50 Boeing aircraft through two state-owned airlines.

But then again, viewed from a global perspective, it is more than just trade mechanics. Tariffs are not only tools for conducting commerce; but they have become a means to renegotiate the place of the countries in the hierarchy of world economic order.  As Immanuel Wallerstein noted in The Modern World-System (1974), peripheral nations such as Indonesia usually function as suppliers of raw materials, cheap commodities, and cheap labor, whereas core nations such as the United States control most of the technology, fiscal regimes and the international norms of trade. Trump’s tariff policy, although framed as a  form of domestic protection mechanism, actually reaffirms this systemic inequality.

In this context, a more critical question must be asked: who truly benefits from this so-called “discounted” tariff? Will it strengthen Indonesia’s economic structure, or instead deepen our dependency on foreign markets and products? The answer cannot be deduced from trade reports alone; it lies in the social realities shaped by such policies, on factory floors, on rural communities, on local markets, and inside working-class homes.

Mounting Pressure on the Social Underside

The labor-intensive sectors are likely the first to feel the blow of the 19 percent tariff. Critical export products like textile, garments, footwear, processed rubber, and consumer electronics, will inevitably lose competitiveness in the US market due to rising prices. In a global marketplace growing increasingly cutthroat, profit margins will shrink. And as has happened time and again, companies will respond through “labor efficiency”: reduced working hours, temporary contract terminations, and hiring freezes. The data from BPS shows that textile industry employs 0.75% of total employment, apparel industry 2.00%, and leather/footwear 0.66%. Most workers in these industries have no active social security and work under temporary contracts. Tariff-induced production contractions will place these groups in the most precarious position, often at risk of losing their livelihoods. This situation is typical of the rise of the precariat, a kind of a growing segment of society working under very insecure, unpredictable conditions with little collective representation. In this economic structure, globalization routinely creates new social categories that work without guarantees and live amid uncertainty.

The impacts are just as severe for domestic farmers and agricultural producers. The agreement to purchase US-grown soybeans, corn, and wheat largely produced under government subsidies and advanced technologies threatens the survival of small-scale Indonesian farmers. In many regions, soybean farmers have long faced price pressures due to a flood of cheap imports. Without protective measures or equal subsidies, imported agricultural goods will likely hasten the exclusion of local farmers from national supply chains and undermine food sovereignty.

Regional Disparities

Tariff-induced investment flows not only place pressure on the working poor, but also widen spatial inequalities between regions in Indonesia. As has been the case over the last decade, industrial zones in West Java, Banten, and parts of Central Java continue to attract the majority of industry relocations. Their advanced and sophisticated infrastructure, logistics, and access to export markets gives them leverage as prime destinations. Conversely, the non-Java regions like the Kalimantan, Maluku and Nusa Tenggara  remain largely excluded from industrial capital, even though they have a geographic potential. Data from ASEAN Briefing show that a  large amount of manufacturing investment is still concentrated on Java which contributes to 58% of GDP, while contributions from eastern Indonesia remain under 10 %  of national GDP.

This geospatial disparity does not only illustrate economic injustice,  but also transforms into unequal access to education, healthcare, and decent employment. In the absence of affirmative policies, like fiscal incentives, capacity-building programs and proactive investment redistribution, regional disparities will continue to rise. Ironically, in global trade negotiations, Indonesia is often represented as a “single voice,” while in reality, the benefits of such agreements are distributed very unequally across its territories.

In such a context, the state cannot limit itself to acting as a market facilitator or tariff negotiator. It must play a highly protective role, actively designing social interventions to ensure that the benefits of foreign policy are felt fairly across the population. Our strategy should be informed by the principle of social justice in globalization, reminding us that global economic participation should not be associated with loss of dignity, welfare, or sustainability of the local communities. Without a very clear commitment to social justice, any trade deal no matter how strategic risks reproducing the very structures of inequality it claims to overcome.

Structural Commitment

The 19 percent tariff imposed by the United States on Indonesian exports cannot be interpreted merely as a diplomatic compromise. Behind this seemingly humble reduction lies a global structure that still discriminates against the developing nations and traps them in weak bargaining positions. In this light, trade policy cannot be focused solely on boosting export numbers; it must include explicit protection for the social groups most affected by it. Tariff negotiations must be assessed holistically: do the benefits reach workers, farmers, and local communities equally, or do they simply reinforce the dominance of elite business groups and central regions?

Tariff negotiations should be evaluated comprehensively, do the benefits reach workers, farmers, and also local communities equally, or only reinforce the prevalence and dominance of elite business groups as well as central regions?

To respond effectively, three very urgent priorities must guide Indonesia’s post-tariff strategy. First, industrial downstreaming and export diversification must be accelerated. Continued reliance on low-margin, low-tech products will keep Indonesia vulnerable to tariff shocks and wage-based competition. Investments in production technology, industrial research, and also support for export-oriented SMEs  should be significantly enhanced. Second, labor protections and social security systems should be strengthened to enable workers to cope with fluctuations in the global markets. Policies such as workforce retraining, contract protection, as well as unemployment insurance ought to be made more adaptive. Third, investment equity must become a national priority ensuring that industry relocation doesn’t remain centered in Java, but helps develop new economic centers in eastern and border regions.

In a very diverse global landscape that is increasingly shaped by tariff politics alongside significant diplomatic pressure, developing countries such as Indonesia need to do more than negotiate effectively. They must summon the political courage to chart a development path that is based in social justice. At its core, a tariff is not just an economic measure, it is a reflection of who holds power to shape the market. Unless accompanied by genuine protection for the most vulnerable, every trade agreement celebrated in macroeconomic terms will leave behind deep structural wounds on the ground.