This paper examines the impact of trade liberalization on plant productivity in Indonesia, distinguishing between the effects of lower tariffs on final goods and intermediate inputs. Using data from the Indonesian Manufacturing Census (1991-2001), which includes plant-level information on imported inputs, the study finds that reducing input tariffs has a more significant impact on productivity compared to reducing output tariffs. Specifically, a 10 percentage point decrease in input tariffs leads to a 3% productivity gain for all firms and an 11% gain for importing firms, while a similar decrease in output tariffs results in only a 1% gain. The results are robust to various robustness checks, including the inclusion of the Asian crisis period and alternative specifications. The study also finds that the benefits of reducing input tariffs outweigh any potential negative effects on competition, as lower input tariffs can increase productivity through learning, variety, or quality effects.This paper examines the impact of trade liberalization on plant productivity in Indonesia, distinguishing between the effects of lower tariffs on final goods and intermediate inputs. Using data from the Indonesian Manufacturing Census (1991-2001), which includes plant-level information on imported inputs, the study finds that reducing input tariffs has a more significant impact on productivity compared to reducing output tariffs. Specifically, a 10 percentage point decrease in input tariffs leads to a 3% productivity gain for all firms and an 11% gain for importing firms, while a similar decrease in output tariffs results in only a 1% gain. The results are robust to various robustness checks, including the inclusion of the Asian crisis period and alternative specifications. The study also finds that the benefits of reducing input tariffs outweigh any potential negative effects on competition, as lower input tariffs can increase productivity through learning, variety, or quality effects.