This paper examines the effects of trade liberalization on plant productivity in Indonesia, distinguishing between productivity gains from reducing tariffs on final goods and intermediate inputs. Using Indonesian manufacturing census data from 1991 to 2001, the study finds that reducing input tariffs leads to significantly larger productivity gains than reducing output tariffs. A 10 percentage point decrease in input tariffs increases productivity by 3% for all firms and 11% for importing firms, while a similar decrease in output tariffs increases productivity by only 1%. The results suggest that lower input tariffs enhance productivity through learning, variety, and quality effects, whereas lower output tariffs increase productivity mainly through import competition. The study also finds that importing firms benefit more from tariff reductions, highlighting the importance of considering the differential effects of trade policy on firms. The findings are robust to various econometric specifications and control variables, and they emphasize the role of input tariffs in driving productivity gains. The paper contributes to the literature on trade liberalization and productivity by providing evidence that reducing input tariffs can have a more significant impact on productivity than reducing output tariffs.This paper examines the effects of trade liberalization on plant productivity in Indonesia, distinguishing between productivity gains from reducing tariffs on final goods and intermediate inputs. Using Indonesian manufacturing census data from 1991 to 2001, the study finds that reducing input tariffs leads to significantly larger productivity gains than reducing output tariffs. A 10 percentage point decrease in input tariffs increases productivity by 3% for all firms and 11% for importing firms, while a similar decrease in output tariffs increases productivity by only 1%. The results suggest that lower input tariffs enhance productivity through learning, variety, and quality effects, whereas lower output tariffs increase productivity mainly through import competition. The study also finds that importing firms benefit more from tariff reductions, highlighting the importance of considering the differential effects of trade policy on firms. The findings are robust to various econometric specifications and control variables, and they emphasize the role of input tariffs in driving productivity gains. The paper contributes to the literature on trade liberalization and productivity by providing evidence that reducing input tariffs can have a more significant impact on productivity than reducing output tariffs.