Indonesia’s industry minister says tariff and non tariff instruments are under consideration for a steel sector running at 43 to 57 percent utilisation while imports reached 7 million tonnes by August, and the measures already in train point to where the new ones will land
JAKARTA, October 15, 2026: Indonesia’s Minister of Industry, Muhammad Sarmuji, said on October 14 that the government is weighing both tariff and non tariff instruments to shield the domestic steel industry from cheaper imports, alongside measures intended to improve the sector’s competitiveness. The statement, reported by Shanghai Metals Market, is short on specifics and heavy on signal, and it arrives at the end of a year in which Indonesian trade authorities have already opened or completed a sequence of anti-dumping actions against Chinese steel.
The condition of the industry is not in dispute. The Indonesian Iron and Steel Industry Association, known by its acronym IISIA, puts domestic capacity utilisation at 43 to 57 percent depending on the product segment. Steel imports reached approximately 7 million tonnes by August 2026, against roughly 8 million tonnes for each of the full years 2024 and 2025, a pace that implies a materially higher annual total. The association has asked the government to control imports of products that Indonesian mills can already make.
A utilisation rate in the forties is below the level at which an integrated steelworks covers its fixed costs. It is the same threshold Ukrainian and European producers have been citing in their own appeals for protection, and it is the number that, more than any import statistic, tends to precede government action.
WHAT IS ALREADY IN PLACE
Sarmuji’s remarks should be read against a trade remedy programme that is already running, because the existing measures define the architecture any new instrument will be bolted onto.
Indonesia’s Anti-Dumping Committee, KADI, has been active against Chinese flat products through 2026. The committee imposed a definitive anti-dumping duty of 4.87 percent on Chinese hot rolled coil, having earlier applied a provisional duty on material from Wuhan Iron and Steel. It extended existing anti-dumping duties on hot rolled coil from seven origins. On September 15, 2026, it initiated an anti-dumping investigation into galvanised steel sheet and coil from China, a case in which the complainants argued that low priced Chinese imports account for 52 percent of domestic demand and, on one measure reported in the Indonesian financial press, as much as 81 percent of the import share in the category.
Those are precise, product specific, price based instruments. A 4.87 percent duty on hot rolled coil is a correction at the margin. It does not change the structure of the market, and it does not restore a mill running at 43 percent to 90 percent. That gap between what the existing toolkit can deliver and what the industry says it needs is the gap Sarmuji’s statement is pointing at.
THE DIFFERENCE BETWEEN TARIFF AND NON TARIFF
The minister’s phrasing, tariff and non tariff instruments, is worth parsing because the two categories operate very differently at the border and create very different compliance obligations for importers.
A tariff instrument in the Indonesian context most plausibly means a safeguard measure. Indonesia has used safeguards on iron and steel products before, and its use of them has been litigated at the World Trade Organization, in the dispute brought by Chinese Taipei and Vietnam over Indonesia’s safeguard on certain iron or steel products. A safeguard requires a finding of increased imports causing or threatening serious injury, applies on a most favoured nation basis to all origins, and is typically structured either as an additional duty or as a tariff rate quota. For importers, the attraction of a safeguard from the government’s point of view is speed, and its cost is breadth: it hits Japanese, Korean, Vietnamese and Indian suppliers along with Chinese ones.
A non tariff instrument in Indonesia means something more specific and, for many importers, more consequential. The Indonesian system makes extensive use of import licensing, and in particular of the Persetujuan Impor, or import approval, together with technical standards administered through the Standar Nasional Indonesia, the national standards regime. Steel products subject to mandatory SNI certification require a certificate of conformity issued against an accredited factory audit before clearance. Expanding the list of SNI mandatory steel products, or tightening the approval regime for import licences, restricts volume without touching the tariff schedule at all, and does so on a timetable set by administrative decision rather than by investigation.
That distinction matters commercially. A duty is a cost that can be passed through, absorbed or priced into a contract. A licensing requirement is a binary. Material that lacks the certificate does not clear, whatever the buyer is willing to pay for it.
THE REGIONAL CONTEXT
Indonesia is not acting in isolation, and the pattern across Southeast Asia over the past eighteen months is unusually clear.
Thailand imposed definitive anti-dumping duties on cold rolled coil and sheet from China, Vietnam and Taiwan. Vietnam has extended anti-dumping duties on polyester filament yarn from four origins and has been active on steel. Malaysia and the Philippines have both run steel trade remedy cases. India opened an investigation into stainless cold rolled products from China, Indonesia and Vietnam, which places Indonesia on the receiving end of a regional action even as it prepares its own.
The driver is the same everywhere. Chinese steel exports have run at historically elevated levels while domestic Chinese construction demand has contracted, and every market that remains open absorbs a disproportionate share of the resulting volume. The European Union’s July 2026 safeguard, which cut tariff free volumes by 46 percent and doubled the out of quota duty to 50 percent, removed a large absorptive market from the global balance in a single step. Material that would have gone to Europe has to go somewhere, and Southeast Asia, with high construction demand, limited existing protection and relatively low freight costs from Chinese ports, is the obvious destination.
Indonesia’s position within that dynamic is complicated by its own industrial policy. The country has spent a decade attracting Chinese capital into nickel processing and, increasingly, into stainless steelmaking. Indonesian stainless capacity built with Chinese investment now exports at volumes that have drawn trade actions from India, the European Union and the United States. A government that imposes import protection on carbon steel while expanding Chinese financed stainless capacity is managing a genuine tension, not an inconsistency it can simply resolve.
WHAT THE IMPORT NUMBERS ACTUALLY SHOW
The headline figure, 7 million tonnes by August against roughly 8 million tonnes in each of the full years 2024 and 2025, is the one that will be quoted. It deserves a moment of scrutiny, because it carries two different implications depending on how it is read.
Read as a run rate, 7 million tonnes in eight months annualises to about 10.5 million tonnes, which would represent an increase of roughly 30 percent over the prior year. That is a surge by any reasonable definition and would support a safeguard finding without difficulty. Read against the possibility that imports were front loaded ahead of anticipated measures, which is the normal behaviour of importers who can read a policy signal, the annualised figure overstates the underlying trend. Both readings are plausible on the information published, and the distinction between them is precisely what a formal investigation exists to resolve.
What is not ambiguous is the capacity utilisation figure. A range of 43 to 57 percent across product segments is not a cyclical trough. Indonesian steel capacity has expanded substantially over the past decade, much of it financed by foreign investment, and a utilisation rate in that range indicates that capacity was built against a demand forecast that has not materialised, or that it has been displaced by imports, or both. The association’s framing, that the government should control imports of products Indonesian mills can already make, is a request for the second explanation to be accepted.
It is worth noting what IISIA did not ask for. The association’s stated request is product specific, aimed at categories where domestic substitutes exist. That is a narrower ask than a blanket safeguard, and it maps more naturally onto a licensing instrument that can be applied tariff line by tariff line than onto a safeguard duty that applies across a broad product definition. If the government follows the association’s framing closely, non tariff measures are the more likely outcome.
THE COMPETITIVENESS HALF OF THE STATEMENT
Sarmuji paired the trade measures with a commitment to improve the industry’s competitiveness, and that half of the statement deserves more attention than it usually gets.
Indonesian steelmaking carries structural cost disadvantages that no border measure addresses. Scale is fragmented across a large number of small rerollers. Electricity costs and reliability vary sharply by region. Scrap collection infrastructure is underdeveloped relative to the size of the economy, which raises the cost of electric arc furnace production. Logistics across an archipelago of more than seventeen thousand islands impose freight costs on domestic distribution that a single landmass producer does not face.
Protection buys time to address those issues. It does not address them. The experience of other economies that have protected steel sectors without a parallel restructuring programme is that utilisation recovers, prices rise, downstream manufacturers lose competitiveness, and the protection becomes permanent because removing it would now cause the collapse it was imposed to prevent. Whether Jakarta’s competitiveness programme is substantive or decorative will determine which of those paths Indonesia takes, and the statement so far gives no basis for judging.
THE WTO DIMENSION
Indonesia has been here before, and the record is instructive.
In the dispute that became known as Indonesia, Safeguard on Certain Iron or Steel Products, Chinese Taipei and Vietnam challenged an Indonesian specific duty on galvanised flat rolled products. The case turned on an unusual point: the measure was applied to all origins except those exempted under the relevant rules, with the result that the complainants argued it did not operate as a safeguard at all in the legal sense. The Appellate Body ultimately found that the measure was not a safeguard within the meaning of the Agreement on Safeguards, because it did not suspend an obligation or withdraw a concession, which meant the safeguard disciplines did not apply to it. That outcome was in one sense a win for Indonesia and in another sense a warning: the measure was still found inconsistent with the most favoured nation obligation in Article I of the General Agreement on Tariffs and Trade because of how the exemptions were structured.
The lesson Indonesian trade officials are likely to have drawn is about design rather than ambition. A safeguard that exempts developing country suppliers below the de minimis import share threshold, as the Agreement on Safeguards permits, is defensible. A safeguard whose exemption list is drawn to produce a particular commercial outcome is not. Importers assessing the likelihood and the shape of a new Indonesian measure should expect a more carefully drafted instrument than the 2015 vintage.
The broader point for exporters is that World Trade Organization litigation is a slow remedy and, with the Appellate Body unable to hear appeals, an increasingly uncertain one. A measure challenged today may be in force for years before any ruling, and a ruling appealed into the void never produces a binding outcome at all. Commercial planning should assume that a measure imposed will remain in force for its stated duration regardless of its legal merits.
THE DOWNSTREAM COST
Indonesian steel consuming industries have not yet entered this debate loudly, and they should be expected to.
Indonesia’s automotive sector assembles upwards of a million vehicles a year and exports a growing share of them, principally to Southeast Asian and Middle Eastern markets. Its appliance manufacturing base is substantial. Its shipbuilding and offshore fabrication yards compete against Chinese, Korean and Vietnamese yards where steel is procured at world prices. Its construction sector is the largest single consumer and the most politically visible, given the government’s infrastructure programme and the continuing development of the new capital at Nusantara.
Every one of those sectors pays more for steel when imports are restricted. In an economy where steel is a traded input to exported goods, protection at the mill gate is a tax on the export sector. That is not an argument against the measure, which has its own industrial logic, but it is an argument that the measure has a constituency against it, and that constituency has historically been effective in Jakarta.
The usual resolution is a duty drawback or exemption regime for steel used in exported manufactures, administered through bonded zones or import facilitation schemes. Indonesia already operates such schemes. Exporters inside Indonesia should be confirming now that their bonded zone status or their import facilitation registration covers the product codes they bring in, because the value of that status rises sharply the moment a measure is imposed.
WHAT IT MEANS FOR IMPORTERS AND EXPORTERS
For firms importing steel into Indonesia, or exporting steel to it, four practical conclusions follow from this week.
First, assume the galvanised coil investigation produces a measure. KADI initiated it on September 15. Indonesian anti-dumping investigations typically run to a provisional determination within six to nine months of initiation, which places a provisional duty plausibly in the first half of 2027. Contracts for galvanised material from China with delivery after March 2027 should carry a duty change clause and should specify which party bears a retroactive provisional duty if one is applied to goods already in transit.
Second, watch the licensing file more closely than the tariff file. An expansion of SNI mandatory product coverage or a tightening of import approval criteria can take effect faster than a safeguard and is harder to plan around. Importers should confirm now that their suppliers hold current SNI certification for every product code they ship, and should understand the lead time for a new factory audit, which can run to several months.
Third, if a safeguard arrives, it will not discriminate. Japanese, Korean, Indian, Vietnamese and Taiwanese suppliers that have gained Indonesian share as Chinese material has drawn anti-dumping duties would be caught alongside Chinese material. Buyers who have diversified away from China as a dumping risk mitigation should understand that the diversification does not protect them from a most favoured nation measure.
Fourth, for Chinese exporters specifically, the cumulative picture across the region is now a programme rather than a series of incidents. Anti-dumping duties in Thailand, Vietnam, India, Indonesia, Malaysia and the Philippines, a European safeguard with a 50 percent out of quota duty, and an Indonesian government signalling both tariff and non tariff action, describe a market structure in which the marginal tonne has fewer and fewer destinations. The commercial response that has worked for the past three years, redirecting volume to whichever market remains open, is running out of road.
For downstream manufacturers inside Indonesia, the consequence is a cost increase. Automotive assemblers, appliance makers, construction contractors and shipbuilders all buy steel. Protection that lifts domestic steel prices towards the import parity level transfers margin from those sectors to the mills. In economies with significant steel consuming manufacturing, that transfer has historically generated its own political counter pressure, and the Indonesian automotive and construction lobbies are not small.
For supply chain planners more broadly, Indonesia’s move belongs in the same file as the European safeguard, the Indian investigations and the Mexican tariff schedule. The governing assumption for the past three decades, that steel is a globally traded commodity whose price converges across regions subject to freight, is being replaced by one in which regional prices diverge because regional access is administered. Models built on the old assumption will misprice. Firms running multi country manufacturing footprints should expect steel input costs to differ by location by margins that no longer wash out, and should expect those differences to persist, because every instrument now being adopted is designed to make them persist.
WHAT TO WATCH
Three concrete signals will indicate how quickly Jakarta moves from deliberation to decision.
The first is a KADI or KPPI initiation notice. KPPI is Indonesia’s safeguard committee, distinct from the anti-dumping committee, and an initiation by KPPI rather than KADI would confirm that the government has chosen the broad instrument over the targeted one. A safeguard initiation would be the single clearest indicator available, and it would start a clock that importers can plan against.
The second is a revision to the list of steel products subject to mandatory national standards certification, or a change in the criteria for import approvals. These appear as ministerial regulations and attract far less coverage than a tariff announcement, but they take effect faster and bind harder.
The third is the provisional determination in the galvanised coil case initiated on September 15. The level of that duty, when it arrives, will indicate whether Indonesian authorities are calibrating to correct a price gap or to foreclose a trade. A duty in the range of the 4.87 percent applied to hot rolled coil suggests the former. A duty in the double digits suggests the latter and would signal a change in posture across the whole programme.
Jakarta has not yet said what it will do. The direction of travel is not in serious doubt, and firms that wait for the announcement before beginning to prepare will be preparing against a deadline rather than ahead of one.