JAKARTA – Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, has expressed confidence in the country’s ability to withstand potential tariff escalations under the second term of U.S.President-elect Donald Trump. speaking at the Business Competitiveness Outlook 2025 event in Jakarta on Monday,January 13,2025,Hartarto addressed concerns over Trump’s aggressive trade policies and their impact on Indonesia.
“The U.S. has already imposed tariffs on Indonesian exports like footwear, apparel, and other commodities,” Hartarto noted. “However, we’ve developed a level of resilience to these measures.” He emphasized that Indonesia is better positioned compared to some neighboring countries, such as Vietnam, wich have faced fewer tariffs.
Hartarto revealed that the Indonesian government is actively pursuing economic collaborations with the U.S. to mitigate the impact of these tariffs. One key strategy is the negotiation of a Free Trade Agreement (FTA), which coudl help reduce trade barriers and foster stronger bilateral ties. “Through these partnerships, we aim to lower the tariffs imposed on Indonesian goods,” he added.
Trump’s protectionist “America First” agenda has been a hallmark of his presidency. In a recent tweet on the Truth Social platform, the President-elect announced plans to impose a 20% tariff on imports from Mexico and Canada, alongside a staggering 60% levy on Chinese goods, effective January 20, 2025. Additionally, Trump has threatened to impose 100% tariffs on BRICS nations—including China, Russia, Brazil, India, South africa, Egypt, Ethiopia, Iran, and the United Arab Emirates—if they proceed with plans to introduce a new currency to rival the U.S. dollar.
“These measures are necessary to curb the influx of drugs and migrants into the U.S.,” Trump stated. though, economists warn that such sweeping tariffs could have far-reaching consequences. They predict higher costs for everyday goods in the U.S., disruptions to global supply chains, and meaningful job losses. Estimates suggest that Trump’s policies could lead to 400,000 layoffs in the U.S. alone, with the automotive sector being particularly hard-hit. Vehicle prices are expected to rise by $3,000 per unit, severely impacting manufacturers like Ford, GM, and Stellantis.
Despite these challenges, Hartarto remains optimistic about Indonesia’s economic resilience. “We’ve weathered similar storms before,” he said. “By strengthening our partnerships and diversifying our trade strategies, we can navigate these turbulent times.”
As the global economy braces for the ripple effects of Trump’s policies, Indonesia’s proactive approach to economic diplomacy may serve as a model for other nations facing similar challenges. The coming months will be critical in determining how these strategies unfold on the world stage.
How can Indonesia balance economic sovereignty with global trade integration in the face of rising protectionism?
Navigating Trade Turbulence: Indonesia’s Strategy Amid Trump’s Tariff Policies
An Exclusive Interview with Dr. Maya Sari, Senior economist at the Jakarta Institute of Economic Studies
Archyde: Dr. Sari, thank you for joining us today.Indonesia’s Coordinating Minister for Economic affairs, Airlangga Hartarto, recently expressed confidence in the country’s ability to withstand potential tariff escalations under President-elect Donald Trump’s second term.What are your thoughts on this optimism?
Dr. Maya Sari: Thank you for having me. Minister hartarto’s confidence is well-founded. Indonesia has faced significant trade challenges in the past, particularly with the U.S.imposing tariffs on key exports like footwear and apparel. Though, the country has built a level of resilience through diversification and strategic partnerships. Unlike some neighboring nations, such as Vietnam, which have faced fewer tariffs, Indonesia has had to adapt quickly, and this has strengthened its economic framework.
Archyde: The Indonesian government is reportedly pursuing a Free Trade Agreement (FTA) with the U.S. to mitigate the impact of these tariffs. How critical is this move, and what challenges might arise during negotiations?
Dr. Maya Sari: An FTA with the U.S. is a crucial step. It would not only help reduce trade barriers but also foster stronger bilateral ties. Though, negotiations will be complex. The U.S. has a protectionist stance under Trump’s “America Frist” agenda, and balancing Indonesia’s interests with U.S. demands will require careful diplomacy. The key will be to ensure that the agreement benefits both parties, particularly in sectors where Indonesia has a competitive edge, such as textiles and agriculture.
Archyde: trump’s recent announcement of a 20% tariff on imports from Mexico and Canada, and a 60% levy on Chinese goods, has sent shockwaves through the global economy. How do you see these measures impacting Indonesia?
Dr. Maya Sari: These measures are undoubtedly disruptive. While Indonesia is not directly targeted, the ripple effects will be felt globally. Higher tariffs on Chinese goods,as an example,could lead to supply chain disruptions,affecting industries that rely on Chinese components. Additionally, the threat of 100% tariffs on BRICS nations if they introduce a new currency adds another layer of uncertainty. Indonesia must remain vigilant and continue diversifying its trade partners to minimize exposure to these risks.
Archyde: Economists predict that Trump’s policies could lead to significant job losses in the U.S., particularly in the automotive sector. How might this affect Indonesia’s trade dynamics?
Dr. Maya Sari: The automotive sector is a critical component of global trade, and disruptions in the U.S. could have a domino effect. If U.S. vehicle prices rise by $3,000 per unit, as predicted, demand for alternative markets, including Indonesia, could increase. However, this also presents challenges. indonesia must ensure its automotive industry is competitive and ready to meet potential shifts in global demand. Strengthening domestic manufacturing capabilities will be key.
Archyde: Minister Hartarto mentioned that Indonesia has “weathered similar storms before.” What lessons from past trade challenges can be applied to the current situation?
Dr. maya Sari: Indonesia’s history of navigating trade disputes has taught us the importance of adaptability and diversification.During the 2018 U.S.-China trade war, Indonesia leveraged its strategic location and growing domestic market to attract investment. This time, the focus should be on deepening regional partnerships, such as with ASEAN nations, and exploring new markets in Africa and the Middle East. additionally, investing in technology and innovation will help Indonesian industries remain competitive on the global stage.
archyde: a thought-provoking question for our readers: In an era of rising protectionism, how can countries like Indonesia balance economic sovereignty with the need for global trade integration? We’d love to hear your thoughts in the comments below.
Dr. Maya Sari: That’s an excellent question.Balancing economic sovereignty with global integration requires a nuanced approach. Countries must protect their domestic industries while remaining open to international collaboration. For Indonesia, this means investing in education, infrastructure, and technology to build a self-reliant economy, while also engaging in multilateral trade agreements that promote fair and equitable trade.It’s a delicate balance, but one that is essential for long-term prosperity.
Archyde: Thank you, Dr. Sari, for your insights.It’s clear that Indonesia’s proactive approach to economic diplomacy will be crucial in navigating the challenges ahead.
Dr. Maya Sari: Thank you. Indeed, the coming months will be critical, but with the right strategies, Indonesia can emerge stronger from these turbulent times.
