Jakarta wants to mitigate the effects of the ongoing conflict between the US and China.
The trade war between United States and China has pushed Indonesia to implement, in turn, tariffs from 100 to 200% on imports of some Chinese goods. The goal of this move? Mitigate the effects of the ongoing conflict along the Washington-Beijing axis.
Indonesian Trade Minister, Zulkifli Hasan, explained that the new policy will come into force once the relevant regulation is issued, adding that the Trade War involving China and the West is causing oversupply on Chinese goods. The consequence of such a phenomenon is simple: Beijing, no longer able to export its goods to rich Western markets, is forced to redirect exports elsewhere, including Indonesia.
“If we were to be inundated with (imported goods), our micro, small and medium-sized enterprises could collapse,” Hasan said.
Jakarta, the largest economy in Southeast Asia, had begun, at the end of 2023, to strengthen the monitoring of over 3 thousand imported goods (from food ingredients to electronic and chemical products), only to then backtrack after the national industry had pointed out to the political authorities that the measure was hindering the import of the flow of materials necessary for their activities. Now the government has decided to change strategy.
Indonesia’s tariffs: what lies behind Jakarta’s move
Why has Indonesia now started to fear being overwhelmed by Chinese imports? There are two main reasons. The first: tensions between the West and China have skyrocketed in recent weeks. The prospect that the conflict could worsen does not please the Indonesian government at all, which fears being a victim of the collateral damage of this Trade War.
Then there is a second reason which concerns the American elections: if Donald Trump wins, it is reasonable to assume a further tightening of the American duties on Chinese goods. With the same consequences reported above amplified to the nth degree.
But which sectors will be affected by Indonesian tariffs? Minister Hasan explained that tariffs will soon be imposed which could impact the imports of footwear, clothing, textiles, cosmetics and ceramics. The Indonesian Trade Safeguards Committee is analyzing the situation to determine duty rates.
Which countries will be affected by Jakarta’s move? The Indonesian plan is a clear attempt to lock down in advance, in anticipation of possible storms. China, in any case, will suffer the primary effects of these tariffs, as could Vietnam and Bangladesh, from which Indonesia mainly imports clothing and accessories related to the fashion sector.
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Prepare for the worst
In short, Indonesia intends to prepare for the worst. Where the worst coincides with Trump’s victory in the USA and the worsening of Sino-American tensions.
“The United States can impose a 200% tariff on imported ceramics or clothing; we can do this too to ensure that our SMEs and industries survive and thrive,” Hasan said.
Rudy Setiawan, senior analyst at MNC Sekuritas, meanwhile warned of the impact of the trade war on the prices of nickel, one of Indonesia’s main raw materials. China’s flagship product happens to be electric vehicles (EVs), which require Indonesian nickel. Well, Jakarta fears that an increase in import tariffs on EVs made in China to the United States could cause a drop in prices of the precious material, with damage to its national economy.
In the current context, full of numerous and sudden developments, the aforementioned Hasan made it clear that for Indonesia it is necessary to create a more appropriate economic management mechanism, both to guarantee the benefits of the national manufacturing industry and to avoid the impact of trade competition between large countries.
Original article published on Money.it Italy 2024-07-11 06:08:00. Original title: Anche l’Indonesia avvia la sua guerra dei dazi: tariffe dal 100 al 200% sull’import cinese
