A prominent economist warns that Indonesia faces the risk of mass layoffs in 2025, a direct consequence of escalating trade tensions and new import tariffs introduced by President Donald Trump. Tauhid Ahmad, Executive Director at the Institute for Development of Economics and Finance (INDEF), has highlighted early indicators of significant job cuts already emerging across various sectors.
More than 24,000 Indonesian workers have been laid off in early 2025, adding to nearly 80,000 jobs lost throughout 2024. Ahmad, a leading economist warns, that businesses are currently reassessing their strategies in response to a global economic slowdown and the renewed protectionist measures from the U.S., signaling a potential “wave of mass layoffs.”
The core concern revolves around Trump’s announced sweeping 10 percent baseline tariff on all U.S. imports, with plans for even higher reciprocal duties for key trading partners, including Indonesia. This economist warns that for some Indonesian products, the new U.S. import duties could soar as high as 47 percent, significantly eroding their competitiveness in the American market.
Bhima Yudhistira, an economist from Celios, echoed these concerns, stating that Trump’s tariffs could put 1.2 million jobs at risk in Indonesia’s labor-intensive industries. He noted that the decrease in exports of such products due to higher tariffs would directly increase the risk of layoffs, threatening the livelihoods of millions of Indonesian workers.
Sectors like textiles, footwear, electronics, and automotive are particularly vulnerable, as they are highly dependent on the U.S. market. Wijayanto Samirin, a senior economist at Paramadina University, also joined the chorus of those who economist warns of a broader economic slowdown, emphasizing the vulnerability of Indonesia’s exports under the new tariff regime.
These economists collectively urge the Indonesian government to act swiftly. They point to signs of an economic slowdown that have already reduced key sector contributions to GDP, with stagnation or even decline observed in critical manufacturing industries. Such indicators necessitate urgent policy responses to mitigate the anticipated adverse impacts.