Trump's 50% aluminium tariff pushes Inalum to focus on the local market

The state-owned aluminium smelting firm, PT Indonesia Asahan Aluminium (Inalum), has reportedly urged the government to revisit the country's import strategy to strengthen the local market , in lieu of anticipated reduction in exports to the United States due to Donald Trump’s decision of doubling aluminium tariffs from 25 per cent to 50 per cent on May 30, 2025. Inalum, in particulr, expects about 30,000 tonnes of it exports to the US to be affected.

“Inalum has been producing semi-finished products, which are then purchased by the domestic industry to be made into finished products,” said Melati Sarnita, Inalum’s President Director, during a parliamentary session on July 16, 2025.

Domestic market: a lifeline amid global trade shifts

Sarnita urged the Indonesian government to increase import controls to increase domestic absorption of aluminium. She highlighted the need for “a more value-added and integrated aluminium supply chain” to protect the sector from global volatility.

“So, we hope that the promotion of import regulations will help downstream producers to find alternative markets domestically that are comparable to the potential loss due to Trump's tariffs,” she added.

Presently, Inalum exports over 50 per cent of its aluminium production, i.e. 30,000 tonnes, and only 48 per cent of its output is retained locally. It is essential to increase this local consumption now. The company projects demand to grow by as much as 600 per cent over the next 30 years, on the back of the solar energy boom. This is particularly for the PV solar, where 1 MW of PV power output requires around 21 tonnes of aluminium.

Turning challenges into industrial growth

Sarnita’s comments illustrate a greater pivot for the aluminium sector in Indonesia. While the protectionist push by Trump could restrict export revenues, the focus now gets shifted to self-sufficiency and autonomous industrial ecosystem creation, along with maximising domestic value addition. Doing this might ultimately protect Indonesia from future trade barriers anyway.

Also read: From 274 thousand tonnes to fivefold aluminium production – Know how Indonesia is planning its major production boom