Indonesia’s palm oil industry eyes new markets amid Trump tariff threat

Indonesia’s palm oil producers are looking to boost sales in other countries following the US government’s announcement of 32% import tariffs. The world’s biggest palm oil producer is reportedly searching for new revenue streams in Africa, the Middle East, Asia, and Europe. 

Indonesia accounts for over half the global palm oil supply, and the ingredient is one of the country’s biggest exports to the US. The US is the world’s fourth-largest importer of palm oil. According to the Indonesian Palm Oil Association (GAPKI), Indonesia shipped 2.5 million metric tons of palm oil to the US in 2023 — 89% of the country’s palm oil supply. 

Palm oil is commonly used in cosmetics, soap, and shampoo. 

Time for negotiations 

The 32% tax on Indonesia makes it one of Asia’s hardest-hit countries by the US’ rolling tariffs. US President Donald Trump has put a 90-day pause on the charges, but Eddy Martono, chairman of GAPKI, told France24 that market diversification “must be done.”

“[The 90-day pause] actually gives time for us to negotiate... so products can still enter there. This is very good,” said Martono. He said he was confident the US would still need Indonesian palm oil but expects the country’s exports to “slightly decline or at least stagnate.”

“Those who are harmed first are consumers in America,” Martono told France24.

Martono called on Jakarta to protect its dominance in the palm oil market through trade negotiations with other countries, particularly Egypt — a top importer. 

Indonesian tariff impacts

Before the 90-day pause was announced, the national council chairman of the Palm Oil Farmers Union, Mansuetus Darto, said the tariffs would have had a far-reaching impact if a deal wasn’t struck.

“The raw material of the palm oil will pile up and then farmers cannot harvest anymore because of overcapacity in existing plants,” said Darto.

Indonesia’s President Prabowo Subianto said Trump’s tariffs may benefit his country by “forcing” it to be more efficient.

At a recent economic meeting, Indonesian Finance Minister Sri Mulyani said that she would lower a crude palm oil export tax to alleviate the financial impact on Indonesian producers.