Trump Increases Import Tariffs to 32%: Economic Threat Analysis by UNAIR Lecturer
U.S. President Donald Trump has increased import tariffs on various goods from multiple countries, including Indonesia, by as much as 32%. This decision has led to expert analysis regarding its potential economic consequences. Professor Rossanto Dwi Handoyo, a specialist in international economics from the Faculty of Economics and Business at Universitas Airlangga, has provided insights on the matter.
Impact of Tariff Increases
Professor Handoyo indicated that the increase in tariffs reflects a belief within the United States that current international trade practices are disadvantageous to American interests. He noted that U.S. exports are often subject to significantly higher tariffs in foreign markets. Furthermore, last year, Indonesia reported a trade surplus of $31 billion, a substantial portion of which is derived from its trade relationship with the United States. According to the professor, these trade dynamics have contributed to ongoing trade deficits experienced by the U.S.
Effects on Indonesian Products
The recent tariff hikes are anticipated to influence the competitive positioning of Indonesian products within the U.S. market, potentially decreasing their appeal due to heightened costs. Professor Handoyo cautioned that these higher tariffs could diminish Indonesia’s trade surplus, potentially resulting in a trade deficit if no government intervention occurs.
Concerns for Economic Growth
Concerns were raised by the professor regarding the necessity of proactive measures from the Indonesian government to mitigate the effects of this tariff increase, which could hinder economic growth. With Indonesia’s economic growth projected at a modest 4.9%, a decline in exports to the U.S. could markedly impact the country’s GDP.
Broader Effects of Trade Policy
In addition, Professor Handoyo pointed out that the ongoing trade dispute, along with a depreciating rupiah and a declining stock market, suggests a broader trend in U.S. trade policy focused on protecting domestic industries from foreign competition. This evolving international landscape, coupled with rising global inflation, has created a cautious sentiment among investors regarding their commitments to Indonesia’s economy.
Importance of Diplomatic Initiatives
To address these potential challenges, Professor Handoyo emphasized the importance of diplomatic initiatives. He suggested a collaborative negotiation approach aimed at strengthening trade ties with the United States, recognizing the critical role of the U.S. not only as a destination for Indonesian exports but also as a crucial supplier in sectors such as agriculture and financial services.
Original source: Universitas Airlangga
