Indonesia Proposes US$10bn Hike in U.S. Energy Imports in Tariff Negotiation

Tempo
15 Apr

TEMPO.CO, Jakarta - Indonesia's Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, has proposed an increase in oil and Liquefied Petroleum Gas (LPG) imports from the United States. This initiative is aimed at achieving equilibrium in Indonesia's trade balance with the U.S.

"The proposal from ESDM is, firstly, to import a greater volume of oil from the United States by increasing our LPG import quota, which is estimated to be above US$10 billion," Minister Bahlil said at the Jakarta Convention Center, Senayan, Central Jakarta, on Tuesday, April 15, 2025.

He elaborated that the plan to augment oil and LPG imports is specifically designed to balance Indonesia's trade relationship with the U.S. It is widely reported that the U.S. has been imposing reciprocal tariffs due to trade deficits.

Minister Bahlil expressed optimism that this strategy would lead to a more balanced trade flow between the two nations.

"Data from the Central Statistics Agency (BPS) indicates our surplus is US$14.6 billion. America wants our trade balance to be in equilibrium. If it's balanced, then, under President Prabowo's directive to us, we will explore what other commodities we can procure from America," Bahlil explained.

Expanding on this, Bahlil noted that the Energy Ministry has formally proposed the increase in oil and LPG imports. He asserted that the implementation of this plan would effectively eliminate the existing trade deficit between Indonesia and the U.S.

"If we simply adjust this, then the trade deficit with the U.S. will no longer exist. Our trade balance will be harmonious, and this is what we will do," he affirmed.

The U.S. currently levies a tariff of 32 percent on certain Indonesian goods. However, several categories of products are exempt from these reciprocal tariffs, including goods protected under 50 USC 1702 (b), such as medical and humanitarian supplies.

Furthermore, other unaffected products include those subject to tariffs based on Section 232 of U.S. trade law, namely steel, aluminum, vehicles, and automotive parts. Strategic commodities such as copper, semiconductors, wood products, pharmaceuticals, bullion or precious metals, and specific energy and mineral products not readily available in the U.S. are also excluded.

The tariff was initially slated to take effect on April 9, 2025. Nevertheless, U.S. President Donald Trump subsequently announced a postponement of the tariff implementation for the majority of its trading partners.

Melynda Dwi Puspita and Ilona Estherina contributed to the writing of this article.

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