Trump’s Protectionist Policies Spark Concern in Indonesia
Indonesia is bracing for potential economic turbulence as Donald Trump prepares to embark on his second term as U.S. President. National Economic Council head Luhut Pandjaitan expressed anxieties about the impact of Trump’s protectionist agenda on the Indonesian rupiah, a sentiment echoing concerns among economists worldwide.
“The impact we [expect] from Trump’s second presidential term is a slowing down of global economic growth and inflation that will be higher. We worry that the US dollar will be stronger and impact our rupiah," Luhut stated in an interview with CNBC Indonesia.
Pandjaitan highlighted two specific policies under Trump’s renewed mandate that could directly affect Indonesia. First, the potential for higher U.S. tariffs, which could disrupt global trade flows and negatively impact Indonesian exports. Second, Trump’s stated intention to categorize countries based on their alignment with U.S. interests, a move that could lead to geopolitical tensions and economic repercussions for nations deemed non-aligned.
Adding to the unease, Trump recently threatened to levy substantial tariffs on BRICS, a group of emerging economies that includes Brazil, Russia, India, China, South Africa and others, should they undermine the U.S. dollar. This underscores the aggressive stance the U.S. might take on the international stage, further unsettling global markets.
Pandjaitan cautioned that navigating these potentially turbulent waters demands a strategic approach. "From what I understand about [Trump], he’s pragmatic. Any action that threatens his interests could prompt a strong reaction," he warned.
This potential for economic volatility comes at a time when the world is already grappling with the COVID-19 pandemic’s devastating economic fallout. The combination of a weakened global economy and Trump’s protectionist policies could create a perfect storm, threatening to derail Indonesia’s economic recovery.
The Indonesian government must now carefully calibrate its response, balancing the need to protect its domestic economy with the imperative to maintain strong ties with the United States, a crucial trading partner.
