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Indonesian palm oil exports to the United States could fall due to proposed tariffs of up to 32% on Indonesian goods, potentially handing Malaysian competitors a bigger share of the market, an industry official told Reuters on Tuesday.
Indonesia and Malaysia are the world's largest palm oil producers, but Indonesia is by far the biggest supplier to the United States, accounting for 85% of total US palm oil imports last year.
If the new tariffs are implemented, shipments of Indonesian palm oil to the US could drop by between 15% and 20%, according to Hadi Sugeng, Secretary-General of the Indonesian Palm Oil Association.
"Palm oil's competitiveness will decline compared with other vegetable oils such as soybean oil and rapeseed oil, especially if the countries exporting those oils face lower tariffs," Sugeng said.
In 2024, Indonesia's exports of palm oil products totalled 29.5 million tonnes. Its average annual exports to the United States stood at around 2.25 million tonnes over the past three years, according to Hadi.
Indonesia's chief trade negotiator travelled to Washington on Tuesday for meetings with US trade representatives, an official at Indonesia's Ministry of Economic Affairs said.
Malaysian palm oil, meanwhile, faces a lower tariff of 25%, giving Malaysian producers a competitive edge over their Indonesian counterparts.
Malaysia's Minister of Plantation and Commodities, Johari Abdul Ghani, said on Tuesday that US importers of palm oil would bear the cost of the additional tariffs.
"There is no substitute for palm oil in the United States, as soybeans cannot be converted into the plant-based chemical raw materials used in toothpaste and detergents," he said.
"In my view, there is no real competition. If they impose a 25% tariff on us, it is the American consumer who will ultimately pay the price," he added.
Source: Reuters