Trump Implements Resipprocal Tariffs As An Opportunity For Indonesia To Strengthen Global Supply Chains

JAKARTA - President of the United States (US) Donald Trump will implement a Resipprocal Tariff policy starting April 2, 2025 and the sectors affected include automotive, agricultural, metal, and manufacturing.

Meanwhile, this policy aims to equalize US import rates to import duties imposed by trading partner countries, to protect domestic industries and reduce trade deficits.

In addition, the main policy implemented is the imposition of new tariffs of 25 percent on aluminum, copper, wood, and steel imports, which aim to strengthen US domestic production. However, this has the potential to lead to an increase in raw material costs for the construction, automotive, and electronic industries.

Bank Danamon Indonesia economist Hosienna Evalita Situmorang said that in the midst of US protectionism policies, Indonesia could take advantage of global trends in diversifying the value chain or supply chain diversion.

"The uncertainty of trade and new tariffs has prompted many global companies to look for alternatives outside China and the US, opening up opportunities for Indonesia to strengthen its position in the global supply chain," he said in his statement, Wednesday, March 5.

Hosienna conveyed the main strategy that Indonesia can strengthen in dealing with changes to US trade policy.

According to him, first, Indonesia needs to increase manufacturing and downstream capacity so that export products have higher added value before entering the US and global markets.

Hosienna said that the next trade agreement with strategic partners must be accelerated in order to expand market access outside the US and third, attracting foreign direct investment (FDI) in the manufacturing sector will strengthen Indonesia's role in the global supply chain.

"Expanding export markets to other regions, including Asia, Europe, and the Middle East, in order to reduce the risk of dependence on one export destination country," he said.

Despite this policy bringing challenges, Hosienna is optimistic that Indonesia's export prospects will remain solid, as seen in the first period of the Trump administration (2017 2021), where Indonesia's exports to the US actually grew, especially for added value products such as textiles, footwear, and electronics.

Hosienna said this positive trend is expected to continue, driven by stable demand from the US, especially for manufacturing and agribusiness products as well as export diversification strategies, including increased exports to non-traditional countries.

"Indonesia's commitment to strengthening downstream industries, which increases global competitiveness. As well as opportunities from global supply chain diversification, where Indonesia can become a manufacturing hub for companies seeking alternatives outside China," he added.

According to him, with the right strategy, Indonesia has the potential not only to maintain its market share in the US but also to strengthen its position in the increasingly fragmented global supply chain.