Jakarta, MINA – The Confederation of Indonesian Trade Unions (KSPI) has issued a warning to the government regarding potential mass layoffs. This comes as a result of a new trade agreement between Indonesia and the United States, which lowers import tariffs on Indonesian products from 32 percent to 19 percent.
KSPI President Said Iqbal believes this agreement could boomerang on Indonesian workers, particularly in export-oriented industries. He highlighted the condition set by US President Donald Trump: in exchange for the tariff reduction, Indonesia must open its doors to US product imports with zero tariffs and no non-tariff barriers.
“On the surface, it looks beneficial because tariffs are down, but beneath that, there’s a serious threat to our domestic industries and millions of our laborers,” Said Iqbal stated on Thursday.
According to Said, there are three tangible threats emerging from this tariff agreement. First, even with import tariffs to the US dropping to 19 percent, the price of Indonesian products may still not be competitive compared to other countries, leading to a decline in demand. “We predict around 40,000 to 50,000 workers are at risk of layoffs in the near future,” he said.
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Second, US products entering Indonesia tariff-free will flood the domestic market. This situation is expected to put pressure on local producers, especially SMEs and small factories unable to compete with imported goods. “When local products lose competitiveness, layoffs are unavoidable,” Said emphasized.
Third, he cautioned about the ripple effect of the high tariffs imposed by the US on China. This has led China to seek alternative markets, including Indonesia. Consequently, Indonesia could be inundated with cheap Chinese products, further squeezing domestic industries.
“Cheaper Chinese goods will flood the market, further crippling local factories and leading to continuous layoffs,” he revealed.
Said also urged the government to look beyond just tariff agreements and consider the impact on workers and national industries. He stressed the importance of the government implementing safeguards, such as increasing domestic production capacity, protecting SMEs, and strengthening the competitiveness of local industries.
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Earlier, US President Donald Trump announced via his Truth Social account that Indonesia would receive a 19 percent tariff facility for products entering the US, down from the previous 32 percent. However, Trump also affirmed an agreement for US products to enter Indonesia without tariffs or other barriers.
This agreement has garnered mixed reactions from business circles and academics who believe there needs to be a balance between export benefits and domestic market protection. [Shibgho]
Mi’raj News Agency (MINA)
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