Indonesia will prepare a retaliatory policy if the United States moves forward with its plan to impose tariffs on 124 products imported from Indonesia as part of its effort to reduce the trade deficit between the two countries. However, to prevent the US from imposing tariffs, Indonesia would first pursue a soft approach to explain that the trade deficit was not caused by the export of products listed in the Generalized System of Preferences (GPS).

Indonesia does not want a trade war because it will cause losses to all parties. The US is in the process of evaluating Indonesian products listed in the GPS, a trade system that was designed to promote economic growth in developing countries by providing preferential duty-free entry.

If the US continues with its plan, a number of Indonesian products exported to the country, like textiles and the textile products, would be affected. At present, the US is the largest clothing importer from Indonesia. If the country were to lobby with the US to expand its Generalised System of Preferences to include more Indonesian apparel and accessories, this would facilitate the entry of more Indonesian products into the US at lower tariffs. Indonesia saw an increase in textile production by eight per cent in the period January to March 2018.