Sri Mulyani Warns To Beware Of The Dynamics Of Trump's Policy After The US Election

Minister of Finance Sri Mulyani Indrawati. (Photo: Doc. ANTARA)

JAKARTA - Finance Minister Sri Mulyani Indrawati conveyed the government's vigilance on the impact of US economic and political policies after the election of Donald Trump as US President.

Sri Mulyani explained that Trump's policy direction is likely to be more accelerated than the previous term of office, with significant implications for the global economy, including Indonesia.

"Usually from the APBN (Trump) side, it will be populist in terms of cutting corporate taxes, but it will also cut a lot of benefits that will be enjoyed by the people to the fiscal balance side and still playing to be seen. Then from the political side of immigration, conflicts between Russia and other countries and the US commitment to climate change will also change," Sri Mulyani said as quoted by ANTARA, Wednesday, December 11.

Sri Mulyani highlighted Trump's proposed high-rate policy, including the 100 percent tariff threat for BRICS member countries and a 60 percent increase in tariffs on Chinese products, potentially increasing geopolitical tensions and global supply chain disruption.

The US protectionist policy can curb the reduction in the Fed's interest rate, aka Fed Fund Rate, leading to global commodity price volatility.

In addition, the US financial market tends to respond to Trump's policy with an increase in the stock market, but this is accompanied by an increase in the deficit and state debt.

The high yield (yield) of US bonds (US Treasury) due to the expectations of fiscal deficits also has an impact on capital flows out of developing countries, including Indonesia.

Therefore, Sri Mulyani emphasized the importance of anticipatory steps for Indonesia in the midst of this dynamic, especially regarding the strengthening trend of the US dollar and changes in US trade policy.

However, the State Treasurer assessed that Indonesia actually had the opportunity to strengthen its position in the global economy.

The best defense step for the country is to ensure food and energy security, as well as position Indonesia as a key player in the supply chain of strategic commodities.

The government under the direction of President Prabowo will prioritize strengthening domestic resilience, especially in the food and energy sector, and take advantage of strategic opportunities to increase Indonesia's position in the global arena.

"In addition to strengthening domestically in terms of food and energy and their influence on various domestic policies, we also anticipate, to show that Indonesia is precisely in the very high global dynamics, the challenges we must anticipate are of course our big trading partners and investments, namely the US and China." he explained.

Furthermore, Sri Mulyani underlined, the tension between the two largest economic powers in the US and China is a significant challenge that Indonesia is facing.

"With the US under President Trump, from the economic side it is bullish and then various implications of its policy. The second-largest economy, China also has an impact that we must still monitor and be aware of. And the impact of relations between China and the US has an impact on the whole world," he said.