By: Dhita Karuniawati )*
Global economic policies often change along with the dynamics of international politics. One policy that has created major ripples in international trade is the high tariff policy promoted by the President of the United States, Donald Trump. Through an aggressive protectionist approach, Trump imposed high tariffs on a number of imported goods, especially from China and other trading partner countries. This policy opened up new gaps and challenges, including for Indonesia. However, behind these challenges, the Indonesian government saw a strategic opportunity to strengthen the national economic position and boost exports to the United States market and other affected countries.
Trump’s tariff policy, known as the “US-China trade war”, began in 2018 when the US government imposed high import duties on hundreds of billions of dollars worth of imported goods from China. This step was taken as a form of pressure on China regarding trade practices that were considered unfair, including allegations of theft of intellectual property rights, state subsidies, and imbalances in the trade balance. In retaliation, China imposed similar tariffs on goods from America.
The domino effect of the trade war is not only felt by the two countries, but also by developing countries that are part of the global supply chain, including Indonesia. In this situation, the Indonesian government is trying to be alert in reading global dynamics and utilizing these conditions as an opportunity to expand export markets and attract foreign investment.
President Prabowo has designed three main strategies to respond to the global situation, including the tariff policy of the US government. One of the initial steps taken by the President was to seek Indonesia’s membership in a number of large country groups, such as BRICS (Brazil, Russia, India, China, and South Africa), as an effort to strengthen Indonesia’s position in the global trade scheme.
Indonesia is also active in various multilateral trade agreements, including RCEP, which involves ASEAN countries together with Australia, Japan, South Korea, and New Zealand, and has access to important organizations such as the OECD, which represents 64 percent of world trade, and is involved in agreements such as CP-TPP, IEU-CEPA, and I-EAEU CEPA.
The second strategy implemented by Prabowo is the maximum utilization of natural resources through an industrial downstreaming program so that the added value of Indonesian products increases. Meanwhile, the third strategy focuses on strengthening people’s purchasing power.
The Indonesian government will reform a number of regulations to respond to the reciprocal tariff policy from the United States. This plan includes a revision of the Domestic Component Level (TKDN) rules as well as changes to import license and quota policies.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the government has prepared a deregulation task force to mature this step. The regulations that the Indonesian government will change are the revision of the Domestic Component Level (TKDN) obligation, adjustment of import duty rates for US products, deregulation of technical considerations (technical regulations) and revision of import quota licenses, tax and customs administration reform, and reform of traded remedies rules (trade protection instruments). A number of business actors and economists at the NTV Insight business conference assessed that the new import tariff policy announced by President Donald Trump could be an opportunity for Indonesia to expand its export market.
Economic Policy Analyst from the Indonesian Employers Association (Apindo) Ajib Hamdani, said Trump’s tariff policy should be a driver for the government to expand bilateral and regional cooperation. Indonesia needs to strengthen the foundation of the domestic economy by building an efficient and low-cost business ecosystem. He also emphasized the importance of revitalizing the labor-intensive sector as a long-term strategy.
The same thing was conveyed by the CEO of PT Oxytane Mitra Indonesia Syofi Raharja. He invited entrepreneurs to dare to explore markets in countries that have so far been considered foreign. As long as Indonesian products are of good quality, Indonesia does not need to worry about the dynamics of tariff wars.
Meanwhile, an economist from Strategic ASEAN International Advocacy & Consultancy (SAIAC), Shaanti Shamdasani said that Indonesia must take advantage of this situation to expand its export market. Indonesia does not have to focus on the United States because our country is already good and has the resources to survive. The tariff policy from the US is a warning alarm that came too late. What Indonesia is currently experiencing should have happened 10 years ago. Now is the time to fix import dependence and make a substitution plan.
Meanwhile, President Director of Nusantara TV Don Bosco Selamun stated that the dynamics of the trade war raised by Trump as an important momentum for Indonesia to develop other large markets outside the US. Once Donald Trump announced the tariff, all multilateral affairs could turn into bilateral affairs.
The high tariff policy of the Donald Trump era did create tension in the international trade system. However, in every global challenge there is always an opportunity that can be utilized, depending on the government’s insight and speed of response. Indonesia, through various policies and reforms, has shown a proactive attitude in facing this dynamic.
By continuing to increase national competitiveness, strengthen economic diplomacy, and create a conducive investment climate, Indonesia has the potential to become an important player in the new global supply chain post-trade war. In the future, the government’s commitment to strengthening economic fundamentals and maintaining national stability will be the key to making the crisis a leap towards progress.
)* The author is a Contributor to the Indonesian Strategic Information Study Institute
