Indonesia's Economy Not Strong Enough To Respond To Trump Tariffs

The implementation of reciprocal tariffs by the United States (US) under President Donald Trump is predicted to put great pressure on the economies of trading partner countries, including Indonesia. Researcher at the Center of Reform on Economics (CoRE) Indonesia Yusuf Rendy Manilet assessed that Indonesia does not yet have sufficient economic resilience to face the effects of this policy. 

"If we say that Indonesia is strong, it can actually be seen from several early indications. For example, the JCI which experienced the sharpest decline compared to other Asian countries," said Yusuf as quoted on Wednesday, April 9, 2025. 

He assessed that the decline reflected investors' distrust of Indonesia's economic fundamentals, which caused capital outflows from the domestic financial market. 

Yusuf acknowledged that Indonesia's connection to global trade is indeed relatively lower than other countries. However, this does not make Indonesia immune to the continued effects of US tariff policies. 

"We have a relatively small share of international trade. But what needs to be anticipated is the broader implications of the trade war echoed by President Trump," he said. 

One of the impacts felt is pressure on the rupiah exchange rate. The weakening rupiah has the potential to push up inflation, especially since Indonesia is still heavily dependent on imports of raw materials and capital goods for industry. 

"When the price of imported raw materials increases due to the weakening rupiah, domestic industries inevitably have to adjust production costs," Yusuf explained. 

Tag: Donald Trump Trump Tariffs Yusuf Rendy Manilet