Indonesia: ‘We Might Lose Our Customers’: Gov’t Told to Cut Palm Oil Export Duty as US Tariff Looms

Indonesian palm oil producers are hoping that the government will slash the duty on US-bound exports, saying that such cuts would be necessary if Jakarta does not want to lose its customers following the recent tariff blitz.

US President Donald Trump kicked off the month by unveiling expansive tariffs on imports from countries around the world. The rates differ by country with the US administration slapping a 32 percent levy on Indonesian goods. The Trump administration claimed they were just trying to reciprocate Jakarta’s unfair trade policies. The new import taxes were supposed to bite starting on April 9. Trump later abruptly suspended them by 90 days after countries rushed to him to negotiate the tariffs. Despite the delay, a baseline add-on tariff of 10 percent on all imports remains in place. Amidst all the chaos, Indonesia’s palm oil industry remains restless.

Indonesian Palm Oil Association (Gapki) revealed that producers already had to deal with a huge burden even before the tariff fiasco. To be able to sell overseas, Indonesian palm oil producers have to allocate a portion of their output to meet local demand as part of a policy better known as the domestic market obligation (DMO). They have to pay export levy to the national palm oil plantation funding agency BPDP, coupled with the export duty charged by the Finance Ministry.

All these cost producers around $221 per metric ton, double the $140 per metric ton that their Malaysian counterparts have to pay to be able to export, Gapki’s chairman Eddy Martono told the Jakarta Globe.

“We are leading in the global palm oil production, seconded by Malaysia. But it does not mean we can rest on our laurels. Because not only do Malaysian producers enjoy lower export costs, they are only getting a 24 percent reciprocal tariff from the US,” Eddy recently said on the sidelines of a business forum in Jakarta.

Eddy claimed that Indonesia held 82 percent of the palm oil market share in the US. But the steep tariffs and export duties might cause Indonesian palm oil prices to soar when sold in the US. This will likely prompt American customers to prefer buying from other countries like Malaysia. Eddy also warned that Latin American nations — whose production is on the rise — might even take over some of Indonesia’s market.

“We are actually on track to be able to export 3 million tons of palm oil to the US annually in the coming years. … But we need to have that special treatment of slashed export costs if we don’t want to lose our customers to others,” Eddy said.

Gapki reported that Indonesia exported 2.2 million tons in 2024, down from 2.5 million tons recorded the previous year. The exports were worth $2.9 billion in 2024. According to economic think-tank INDEF, Indonesia sells about 14.8 percent of its refined palm oil exports to the US, meaning that Washington is not the only market for this industry. Its dependence on the US market is far lower than other goods like photovoltaic cells (98.2 percent) and whiteleg shrimp (82.5 percent).

Tags: palm oil, imports, tariffs, exports, Indonesia, Canada, US, Production, Malaysia