Import Tariffs RISE to 32%! Indonesia on the Verge of MICRO DUMPING?!

Summary

This video addresses the consequences of the U.S. raising import tariffs on Indonesia, highlighting the negative impact on the economy, including potential currency and stock market volatility. It explores the broader context of the trade war between the U.S. and China, and the creation of the BRICS alliance, which includes countries like Brazil, Russia, and China, and the recent inclusion of Indonesia. The script also critiques Indonesia's economic policies and government actions, pointing out the struggles of local industries and the challenges facing small businesses. The speaker calls for greater support for local businesses and economic reform to stabilize the country.

Takeaways

• 😀 The U.S. has raised import tariffs on Indonesia to 32%, posing a significant threat to the country's economy, as well as others like China, Vietnam, and Thailand.
• 😀 The U.S. and China are in a trade war, with both countries increasing import tariffs on each other's goods, leading to global economic disruption.
• 😀 BRICS, a group of five countries (Brazil, Russia, India, China, South Africa), was formed as an alternative to Western-dominated economic systems, aiming for de-dollarization.
• 😀 Indonesia recently joined BRICS, but the benefits are still unclear, with no concrete actions like free trade agreements or tariff reductions between members.
• 😀 The potential for the Chinese RMB to replace the U.S. dollar as the global reserve currency remains a major point of focus in the BRICS discussion.
• 😀 The rise in U.S. tariffs could lead to a weakened rupiah and significant market instability in Indonesia, with the stock market (IHSG) potentially losing 2-3%.
• 😀 Indonesia’s large population (nearly 300 million) and consumption-driven economy make it a prime target for countries with increased tariffs.
• 😀 The phenomenon of 'micro dumping' could negatively impact Indonesia's local businesses, as foreign companies bypass tariffs by using unofficial channels.
• 😀 Despite a large trade surplus with the U.S., Indonesia faces economic challenges, including a growing reliance on imported goods and increasing costs for local industries.
• 😀 The Indonesian government is urged to reduce bureaucracy, protect local industries, and incentivize small businesses to improve economic growth and resilience.

Q & A

What impact did the United States' tariff hike have on Indonesia?

The United States raised the import tariff on Indonesia to 32%, which is expected to negatively impact Indonesia's economy, potentially weakening the Rupiah and shaking the Indonesian Stock Exchange (IHSG).

Why is the trade war between the U.S. and China affecting smaller countries in Asia?

The trade war between the U.S. and China has resulted in higher tariffs on products from both countries, creating a ripple effect on other countries like Indonesia, Vietnam, Cambodia, and Thailand. These countries are at risk of being overwhelmed by surplus goods from China and Vietnam as these nations seek new markets due to the U.S. tariffs.

Who are the key figures driving the U.S.-China trade war?

The trade war between the U.S. and China is primarily driven by two individuals: Donald Trump, the former U.S. president, and Xi Jinping, the President of China. Both are involved in a trade conflict, each raising tariffs on the other's goods.

What is BRICS, and how does it relate to the trade war?

BRICS is a group of five emerging economies: Brazil, Russia, India, China, and South Africa. The formation of BRICS was partly a response to the U.S.-China trade war, with the aim of creating an alternative economic bloc to challenge Western dominance, particularly by de-dollarizing and promoting the Chinese RMB as a reserve currency.

How might BRICS impact the global economy if it becomes more unified?

If BRICS becomes more unified, it could challenge the Western-dominated economic system, especially by creating its own payment system or adopting the Chinese RMB as its primary currency. This could significantly reduce the influence of the U.S. dollar and alter global economic dynamics.

Why is Indonesia's inclusion in BRICS significant, and what are the potential benefits?

Indonesia's inclusion in BRICS is significant as it gives the country a voice in a powerful emerging bloc, but the actual benefits have yet to materialize. There is still no clear free trade agreement, tariff reductions, or major infrastructure projects, which makes it hard to see immediate advantages for Indonesia.

How has the 32% tariff hike affected Indonesia's trade surplus with the U.S.?

Indonesia's trade surplus with the U.S. is significant, reaching $16.84 billion in 2024. However, the new 32% tariff hike might threaten this surplus by making exports to the U.S. more expensive, further complicating Indonesia's trade situation.

What economic risks does Indonesia face due to the increased tariffs and global market conditions?

Indonesia faces several economic risks due to the tariff hike, including potential currency depreciation (with the Rupiah possibly reaching 17,000), stock market instability, and the likelihood of increased pressure on local industries and the economy, especially if the government does not act swiftly to stabilize the situation.

What is 'Micro Dumping,' and how could it impact Indonesia's economy?

Micro Dumping refers to the illegal practice of bypassing high tariffs by selling goods at significantly lower prices in local markets, often through informal channels. This practice could undermine local industries and businesses in Indonesia, as well as decrease government tax revenues, harming the economy in the long term.

What measures should the Indonesian government take to protect local industries and improve the business climate?

The Indonesian government should focus on improving the business climate by reducing bureaucracy, addressing corruption, offering incentives to local industries, and facilitating technology transfers. Furthermore, it should ensure that trade policies, including tariffs, do not harm domestic production or lead to an influx of cheap imported goods.