US tariffs are having ripple effects far beyond American borders — mainly in Indonesia, where a surge in low-cost Chinese goods is shaking up the domestic market. Local producers are struggling to compete, prompting widespread factory closures and the loss of over 70,000 jobs in just two years. The Indonesian government is now considering protective measures to safeguard its industrial base. The situation highlights a broader truth: when Chinese exports are blocked from entering the US, they must find new markets. For now, Southeast Asia is absorbing the impact — often with damaging consequences.
Indonesia faces a flood of Chinese goods
On 10–11 July, Southeast Asian foreign ministers gathered in Kuala Lumpur. Among the key topics: the indirect fallout from Trump’s trade tariffs — chief among them, the influx of Chinese goods flooding regional markets. This surge is largely driven by dominant e-commerce platforms such as Lazada, Temu, and Shopee. In 2023, ASEAN (which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) overtook the US and EU as China’s top export destination.
In 2024, Chinese exports to these ten nations climbed a further 12%, while ASEAN’s exports to China rose by only 2%. In April 2025 alone, Chinese shipments jumped: 18% to Vietnam, 30% to Cambodia, 12–15% to Malaysia and Indonesia, and 8–12% to Thailand. While consumers in the region enjoy cheaper prices, the economic toll on local industries is proving heavy.
A hidden flood of illicit imports
According to a recent Citigroup report cited by Sourcing Journal, Indonesia provides a striking example. Between January and April 2025, Chinese textile imports surged to USD 834 million — up from USD 309.7 million during the same period in 2024. Footwear imports also rose sharply, from USD 152.36 million to USD 199.4 million. Meanwhile, analysts estimate that up to 1,000 containers of Chinese goods enter the country illegally each year, undercutting local manufacturers. The impact has been devastating. In the past two years, hundreds of Indonesian apparel factories have shut down, triggering more than 70,000 job losses. The balance between affordability for consumers and survival for domestic industries has never looked more precarious.
Indonesia weighs its response
In response, Jakarta is preparing steep retaliatory tariffs of 100% to 200% on selected Chinese imports, including textiles and footwear. Additional measures — ranging from subsidies to export bans and regulatory reforms — are also being considered to preserve jobs and stabilise the sector. Amid these developments, there is at least one encouraging sign. The US and Indonesia have reached a trade agreement that will see Indonesian products taxed at 19% upon entering the US — down from a previously threatened 32%. Though far from a full solution, the reduced tariff could offer a lifeline to Indonesia’s struggling manufacturers.
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