Jakarta. Denmark tries to build closer economic ties with Indonesia as the clock ticks down to the US’ steep reciprocal tariffs.

US President Donald Trump’s threats to impose import taxes, which can go as high as 50 percent, have sent many countries to diversify their markets. The European Union (EU) and its members, too, are engaging with their trading partners outside the US. EU member Denmark has sent its foreign minister, Lars Løkke Rasmussen, on a two-day visit to Indonesia to meet the country’s high-ranking officials starting Monday.

"We live in an unsettled time with rising tariffs and less predictability. Therefore, it is necessary to forge stronger ties with partners across the globe,” Rasmussen was quoted as saying in a press statement on Tuesday morning.

“Indonesia is a heavyweight in Southeast Asia, and we have both a geopolitical and trade interest in having an even closer relationship with them,” he said.

Both countries are among those to get hit by US President Donald Trump’s tariffs that are set to take effect early July. The tariff rates vary by country. 

According to the currently on-hold plan, Trump intends to impose 32 percent tariffs on Indonesian goods. The import tax on US-bound goods coming from Denmark or the EU as a whole will stand at 20 percent. A baseline 10 percent tariff on all imports is already in effect.

Official figures showed that Indonesia-Denmark’s trade volume totaled $403.2 million, up from $366.7 million posted the previous year. However, it was still less than half the $946.4 million trade recorded in 2022. Indonesia ran a $41.4 million deficit when doing commerce with Denmark last year, but saw a $472.3 million surplus in 2022, the Trade Ministry revealed.

A deficit means that Indonesia is buying more Danish goods than what it exports to Denmark, while a surplus is the other way around.

Southeast Asia’s largest economy reported a nearly $4.5 billion surplus in its trade with the EU bloc in 2024. This marked a huge jump from the $2.5 billion surplus in 2023, according to the Indonesian government data.

Trump’s tariff hammer has given a new impetus to Jakarta's ongoing negotiations on the comprehensive economic partnership agreement (CEPA) with the EU as both sides look to reduce their reliance on the US market. Indonesia seeks to wrap up the talks in the first half of 2025. Bernd Lange, who heads the European Parliament’s trade committee, even came to Indonesia last week with the CEPA high on the agenda. Speaking to Jakarta-based reporters then, Lange revealed that both sides had already resolved “around 80 percent” of the issues related to the much-awaited pact.

“We have a lot of common understanding related to investment in services, recognition of standards, as well as lowering the tariffs [in our trade],”Lange said at the time.

Energy Cooperation

Rasmussen’s first day of his Jakarta tour included the signing of some documents related to energy. Both countries had agreed to extend their energy cooperation -- particularly on renewables -- as Indonesia intends to wean off coal. Reports show that over half of Denmark’s electricity supply comes from wind power. Indonesia, on the other hand, remains heavily reliant on coal to this day.

“Denmark has a vast experience in renewable energy, particularly wind. … They also have the technology that improves its energy efficiency,” Energy Minister Bahlil Lahadalia said in a separate press statement.