The Center of Reform on Economics (CORE) Indonesia has analyzed that the protectionist trade policies of U.S. President Donald Trump could have a positive impact on Indonesia’s investment, exports, and GDP. According to CORE economist Sahara, these protectionist measures could lead to a 0.04% increase in both investment and exports for Indonesia, based on assumptions of a 60% tariff hike on all imports from China and a global tariff of 10% on imports from other countries. Although most exports to the U.S. are expected to decline, particularly traditional products like footwear and textiles, there is potential for Indonesia to diversify its trade, especially with China.
Sahara also mentioned that the protectionist policy could lead to a 0.14% increase in imports and a 0.002% growth in GDP for Indonesia. Despite the potential negative global effects, with the World Bank predicting a 0.2% reduction in global growth due to these tariffs, Indonesia could still benefit from redirected trade flows. As President Trump shifts focus to addressing unfair trade practices globally, Indonesia has an opportunity to position itself as a beneficiary of these changes, especially with China as a new trade partner.
