Indonesia Needs to Be ‘Smart’ in Dealing With Trump‘s Potential Trade Policies
Economist Warns of ‘Slowdown in Global Growth, Inflation, and Dollar Strength’
The government should closely monitor the potential impact of increased protectionist policies in the United States under Donald Trump’s second presidential term, warned Luhut Pandjaitan, head of the National Economic Council (DEN).
Pandjaitan cautioned that such policies could put pressure on the rupiah. “The impact we expect from Trump’s second term is a
slowdown in global economic growth, higher inflation, and a stronger US dollar which could impact our rupiah,” he said on Monday.
Proposals for Austerity and Bundled Trade Politics
Pandjaitan also highlighted Trump’s plan to establish a Department of Government Efficiency led by tech industry magnate Elon Musk. The goal: slash the US federal budget by up to US$2 trillion.
He stressed the importance for Indonesia to be strategically prepared for these changes. “We need to play smart in our dealings with the US. From what I understand about Trump, he’s pragmatic. Any action that threatens his interests could prompt a strong reaction,” Pandjaproductivei
tan warned.
Read also: BI keeps interest rate unchanged to stabilize rupiah
Uncertainty Over Tariffs and International Alliances
In an interview with CNBC Indonesia on Monday, Pandjaitan outlined two major US policies under Trump that could have significant impacts on Indonesia.
Firstly, potential hikes in tariffs and secondly, the US president-elect’s intention to categorize countries based on their alignment with US interests.
Further compounding these concerns, Trump threatened on Monday to impose stiff tariffs on BRICS – a powerful group of emerging economies encompassing Brazil, Russia, India, China, South Africa, and others – if they undercut the US dollar.
What specific protectionist policies of Donald Trump’s are causing concern for the Indonesian economy?
## Interview with Luhut Pandjaitan
**Host:** Mr. Pandjaitan, thank you for taking the time to speak with us today. You’ve expressed concern about the potential impact of Donald Trump’s second term on the Indonesian economy. Could you elaborate on your concerns?
**Pandjaitan:** Certainly. We are closely watching President Trump’s economic policies, particularly his protectionist tendencies. [ [1](https://www.thejakartapost.com/world/2024/11/19/trump-policies-could-cast-shadow-over-indonesia-asia.html) ] Analysts predict that these policies could lead to slower growth and higher unemployment in Indonesia and across Asia.
Specifically, we anticipate a slowdown in global economic growth, rising inflation, and a stronger US dollar, all of which could negatively impact the rupiah.
**Host:** You mentioned “smart dealings” with the US. Could you explain what that means in the context of these potential challenges?
**Pandjaitan:** President Trump is a pragmatist. We need to understand his interests and find ways to align our own interests accordingly. Any action that threatens those interests could provoke a strong reaction from him.
**Host:** You also highlighted Trump’s plan to consolidate budgets with a Department of Government Efficiency led by Elon Musk. How do you see this impacting Indonesia, either directly or indirectly?
**Pandjaitan:** While this domestic policy within the US may not directly impact us, it does signal a potential shift towards fiscal conservatism. This could influence global trade practices and potentially create new trade barriers, which we need to be prepared for.
**Host:** What steps is the Indonesian government taking to mitigate these potential risks?
**Pandjaitan:** We are closely monitoring the situation and actively engaging with our American counterparts to understand their policy direction. We are also exploring ways to diversify our trade partners and strengthen regional economic cooperation to build resilience against external shocks.
**Host:**
Mr. Pandjaitan, thank you for sharing your insights with us today.
**Pandjaitan:** Thank you for having me.
