JAKARTA (Reuters) -Indonesian palm oil exports to the United States may fall due to the 32% tariffs threatened on Indonesian goods, allowing competitors in Malaysia to gain market share, an industry official told Reuters on Tuesday.
The two countries are the world’s biggest palm oil producers, but Indonesia has been by far the biggest supplier to the United States, accounting for 85% of its total imports last year.
But if the new tariff comes into effect, it could lead to a 15%-20% drop in Indonesian palm oil shipments to the United States, said Hadi Sugeng, secretary general of the Indonesia Palm Oil Association.
“The competitiveness of palm oil will decline against other vegetable oils such as soybean oil and rapeseed oil, especially if countries exporting these vegetable oils receive lower tariffs,” he added.
Overall, Indonesia exported 29.5 million tons of palm oil products in 2024. Exports to the United States stood at an average of 2.25 million metric tons per year over the past three years, Hadi said.
Indonesia’s top negotiator is headed to Washington on Tuesday to meet with trade representatives of the United States, an economic ministry official said.
Malaysian palm oil faces a lower tariff of 25%, giving producers an advantage over their Indonesian counterparts.
Speaking on Tuesday, Malaysia’s plantations and commodities minister Johari Abdul Ghani said U.S. importers would have to bear the cost of additional tariffs on palm oil.
He said there was was no alternative to palm oil in the U.S. as soybeans cannot be converted into oleochemicals, plant-based products used in toothpastes and detergents.
“I think it’s a non-competition. If they charge us 25%, ultimately the person who is going to pay for it will be the Americans,” he said.
(Reporting by Bernadette Christina Munthe and Ashley Tang in Kuala LumpurWriting by Fransiska Nangoy; Editing by David Stanway)
