Indonesian Furniture Industry Faces Threat of Losing US Market Due to Export Tariffs, HIMKI Urges Preferential Tariff Negotiations

JAKARTA, July 16, 2025 – Business and furniture industry players in Indonesia are currently in a state of unease following the threat of additional export tariffs to the United States (US) as a result of US President Donald Trump's policy. The Chairman of the Indonesian Furniture and Craft Industry Association (HIMKI), Abdul Sobur, affirmed that this policy would trigger serious impacts, including a threat to millions of workers.

"I need to emphasize that Indonesia's furniture and craft sector is one of the labor-intensive sectors that directly supports more than 3 million workers. The threat of additional tariffs from the United States, which is reportedly up to 32% beyond previous sectoral tariffs, has a very serious impact," Abdul Sobur told CNBC Indonesia on Tuesday (14/7/2025).

The main concern arises regarding the price competitiveness of Indonesian furniture products, which are potentially no longer competitive compared to rival countries such as Vietnam, Malaysia, or Mexico.

"If these additional tariffs truly come into effect and there is no way out through negotiations, then the potential increase in prices for Indonesian furniture products in the US market could rise by 20%-35%," Abdul Sobur emphasized. As a simple example, a wooden chair product normally sold to US buyers for US100perunit,withthistariff,thepricecouldincreasetoUS120-135 per unit. "This means we lose competitiveness compared to Vietnam, Malaysia, or Mexico, which might receive lower tariff treatment," he continued.

Loss of Consumer Interest and Production Decrease

The high price of Indonesian furniture products will lead to a lack of interest from US consumers to purchase them. As a result, orders will drastically decline, production capacity will have to be reduced, and industry players will bear high fixed costs. This condition is what Abdul Sobur fears could trigger potential mass layoffs in this labor-intensive sector.

Abdul Sobur confirmed that signs of weakening are already visible. "Currently, demand from US buyers has started to weaken," he stated. Several HIMKI members in major production centers have complained about a 20-30% decrease in orders compared to last year. A number of small and medium-scale factories have also begun to reduce working hours, and even downsize their workforce to survive.

Responding to this threat, Abdul Sobur urged the Indonesian government to immediately conduct more intensive bilateral negotiations to obtain preferential tariffs for Indonesian furniture products. In addition, he also emphasized the importance of opening new market access in the Middle East, Eastern Europe, and South Asia to balance the dependence on the US market.

Developments in US Export Tariff Negotiations

On the other hand, there are the latest developments related to US tariff policy. The Coordinating Minister for Economic Affairs, Airlangga Hartarto, revealed that Indonesia has received a postponement of the application of the 32% US reciprocal tariff. This postponement was obtained after negotiations with US Secretariat of Commerce Howard Lutnik and United States Representative Jamieson Greer on July 9, 2025.

Airlangga returned to the US in response to President Trump's announcement to maintain the 32% tariff after 90 days of negotiation, since the first tariff war policy was announced in April 2025.

"So, firstly, the additional 10% (BRICS members) is not there. Secondly, the time is what we call a pause, so a postponement of the implementation to complete the ongoing negotiations," Airlangga said in Brussels, Belgium, Sunday (13/7/2025).

Airlangga explained that from his visit to Washington, US, Indonesia was given three weeks to conduct further negotiations to finalize the talks. "So, these three weeks are expected to finalize the fine-tuning of the proposal and the fine-tuning of what has been exchanged," he added.

Source: CNBC Indonesia. The full article "Mebel RI Terancam Kena Gebuk Vietnam-Malaysia di AS, Ini Pemicunya" can be accessed at https://www.cnbcindonesia.com/news/20250714155532-4-648963/mebel-ri-terancam-kena-gebuk-vietnam-malaysia-di-as-ini-pemicunya.