Before the Tariff War witnessed by the whole world in 2025, the 2018-2020 trade war had occurred but was not vulgarly exposed, surely it caused world trade to fall by 3% and global GDP to fall by 0.8%.
The 32% tariff imposed on imports from Indonesia is not a small number, while China is facing a worse situation with the retaliatory tariff war due to the Transhipment it initiated.
This has created the Threat of Global Economic Fragmentation,
This fragmentation not only has an impact on changes in the global supply chain, global economic governance but also on the formation of new economic blocs that have the potential to isolate certain countries.
Intelligence observer who is also a Lecturer in Intelligence Analysis at STIN Dr. Stepi Anriani said that there are 3 attitudes that can occur from the formation of global economic blocs.
“First, countries fight US dominance by forming new economic blocs; or Second, the world follows the US scenario and increasingly submits to US hegemony.
Third, the attitude of countries that try to negotiate and are neutral, are softer in positioning themselves,” explained Dr. Stepi Anriani in Jakarta, Tuesday, April 15, 2025.
Geopolitical Dynamics and Indonesia’s Position in the Indo-Pacific
Strategic competition between major power countries is not only manifested in the form of trade wars, but also increasing tensions at various global flashpoints.
The ongoing conflict between Russia and Ukraine, the escalation of the situation in Gaza and the Middle East, and the heating up of tensions in the South China Sea are the main notes in the dynamics of the strategic environment.
Since China’s Peaceful Rise 3 decades ago successfully opened up various alternatives to China’s Bargaining position and increased economic growth by 8-10%, China has become a challenger to US hegemony. The governance of the world economy is slowly changing and has implications for regional and global stability, especially with the many multilateral cooperation, summits and economic growth of BRICS.
One of the flashpoints of the strategic environment that is quite vulnerable is the Indo-Pacific. This strategic region is directly in front of Indonesia, with the military power that has been deployed, the world must prepare for the worst-case scenario, namely the outbreak of open war in several regions as a consequence of this tension.
Indonesia’s Role in Facing Tariff Wars
Indonesia is geopolitically located in the Indo Pacific region which is a strategic region. As a central region, the Indo Pacific is the epicenter of economic growth, technological innovation, and discourse on regional issues.
Indonesia needs to take a strategic role in preventing open conflict in the region.
Some things that need to be prepared and played more strongly by Indonesia are:
✅ The first priority is to strengthen the domestic economic structure, maintain people’s purchasing power, and maintain price stability so that national economic resilience is built.
Trying to attract investment for development and job creation. Collaboration with local and foreign entrepreneurs.
✅ Diversification of trade and strategic partnerships with various multilaterals.
✅Strengthening the ASEAN Economic Forum and solidarity of ASEAN countries +
✅Adaptive Diplomacy in response to Trump’s Tariff War
✅ Increasing Public Trust domestically, regionally and globally by emerging as a “middle power” and providing solutions.
✅ Strengthening Economic Intelligence for Early Detection. Indonesia needs to strengthen the role of economic intelligence in monitoring global dynamics, detecting early threats of tariff war impacts, and protecting strategic sectors. Synergy between intelligence, policy makers, and business actors will increase national preparedness against external economic pressures.
✅ Initiating the Global South Consultative Platform.
Indonesia can lead the establishment of the Global South Economic Dialogue Initiative as a consultative forum for developing countries to share strategies to deal with tariff wars and strengthen their collective bargaining position on the global stage. This initiative reflects Indonesia’s leadership as a proactive, collaborative, and visionary middle power in encouraging a fairer and more inclusive global economic system.
Of course, it is not easy for Indonesia to position itself as a neutral and friendly party, but negotiation-diplomacy and partnership must continue to be pursued.
The momentum of the crisis must be able to encourage economic transformation, acceleration of digitalization, and transition to a green economy and renewable energy.
Indonesia needs to actively develop trade in potential regions such as Europe, South Asia, the Middle East as an alternative to dependence on goods originating from the US.
The Indonesian government’s strategy to build good relations with the Middle East shows various diplomatic alternatives to protect its national interests.
Government Visitsto various countries also reflects Indonesia’s position as a middle power that seeks to play a balancing role amidst the competition of great powers.
Indonesia needs to strengthen its domestic resilience while prioritizing Solidarity.
In Indonesia’s social interactions, collaboration is needed as the key to facing today’s global challenges.
Indonesia, with its strategic position in the Indo-Pacific region, has the opportunity and responsibility to contribute to shared stability and prosperity.
Indonesia must be able to see opportunities even in crisis situations and critical conditions.
The negotiations and communications prepared by the government to address the Tariff War are positive and need to be supported.
This also needs to be followed by fundamental development in terms of domestic economic resilience and improvements to various national resilience infrastructures.
Therefore, in facing global economic fragmentation and escalating geopolitical tensions, Indonesia is not enough to just survive but must appear as a middle power that actively builds solutions, and strengthens economic intelligence as a strategic instrument to maintain national interests amidst global uncertainty.
