Indonesia Launches ‘Tariff War’ With China! Rates Soar to 200%! What China Feared Has Happened
Summary
TLDRIndonesia's Trade Minister, Zulki Hassan, announced safeguard tariffs of 100% to 200% on imports, including footwear and ceramics, to protect domestic industries from Chinese products flooding the market due to trade wars. This move is part of Indonesia's strategy to reduce reliance on China, as it strengthens economic ties with other nations, including Japan and the US, and engages in regional cooperation to address security challenges in the South China Sea.
Takeaways
- 📢 Indonesia's trade minister, Zukii Hassan, announced the imposition of safeguard tariffs ranging from 100% to 200% on various imported products to protect domestic industries.
- 🛡️ The Indonesian government is sending a warning to Chinese goods, indicating that they can impose the same high tariffs as the United States on ceramics or clothes to support local businesses.
- 🌐 Chinese products, affected by the trade war and shut out by Western countries, are now flooding the Indonesian market, prompting the government to draft new regulations.
- 🏭 The newly announced tariff policy will impact products such as shoes, clothing, cosmetics, and ceramics, and is part of Indonesia's strategy to gradually restrict the import of Chinese goods.
- 🔑 Indonesia is naming these tariff measures 'Safeguard measures import tax (BMTP)' and 'anti-dumping import tax (BMAD)', emphasizing their role in protecting domestic industries.
- 📈 Indonesia is actively promoting economic cooperation and trade with other countries to reduce reliance on China, strengthening ties with Asian countries like India, Japan, and South Korea, as well as with Europe and the United States.
- 🤝 Indonesian president-elect, Proo Subbiano, expressed a desire to strengthen the relationship with Japan, who agreed to provide patrol vessels and support in infrastructure and energy sectors.
- 📊 Investment from South Korean companies in Indonesia has increased significantly, with businesses like Hyundai and LG Electronics shifting their focus from China to Indonesia.
- 🌏 The United States and Indonesia have upgraded their relationship to a comprehensive strategic partnership, with cooperation in critical minerals, semiconductor supply chains, and climate issues.
- 💡 Microsoft and Apple are investing in Indonesia, with Microsoft training people in AI and Apple considering moving production lines to the country, highlighting Indonesia's growing economic importance.
- ⚓️ Indonesia is participating in regional cooperation organizations and addressing security challenges in the South China Sea, showing a firm stance in its relations with China and other regional players.
Q & A
What action has Indonesia announced regarding tariffs on imported products?
-Indonesia announced that it will impose safeguard tariffs ranging from 100% to 200% on imported products such as footwear and ceramics, as a measure to protect domestic industries.
Why is Indonesia considering imposing such high tariffs on certain imported products?
-Indonesia is considering high tariffs to protect its micro, small, and medium enterprises and industries from the influx of Chinese goods that have been shut out by Western countries and are now flooding the Indonesian market.
What is the impact of the trade war on Chinese products in Western countries as mentioned in the script?
-The trade war has resulted in Chinese products being shut out by Western countries, leading to these products flooding the Indonesian market instead.
What measures is Indonesia taking to address the influx of Chinese goods?
-Indonesia is drafting new regulations to address previous ones that were not stringent enough and is imposing safeguard tariffs on certain imported products.
What are the high-sounding names given to Indonesia's tariff measures?
-The tariff measures are named Safeguard measures import tax (BMTP) and anti-dumping import tax (BMAD).
What is the purpose of BMTP according to the Indonesian Finance Minister?
-BMTP is a national tax measure aimed at preventing domestic industries from facing severe damage due to a significant increase in imported goods.
How are Chinese enterprises reacting to Indonesia's move towards imposing tariffs?
-Chinese enterprises are alarmed by Indonesia's move, as it could impact their business in a country that is a significant importer of their goods.
What economic strategy is Indonesia adopting to reduce reliance on China?
-Indonesia is promoting economic cooperation and trade with other countries and regions, strengthening relations with countries like India, Japan, South Korea, Europe, and the United States.
What was the outcome of the meeting between Indonesian president-elect and the Japanese Prime Minister regarding their relationship?
-They expressed their long-term friendship and cooperative relationship and agreed to further strengthen ties, particularly in economic cooperation and defense.
What is the significance of the Indonesia-US relationship upgrade to a comprehensive strategic partnership?
-The upgrade signifies a new era in relations between the two countries, with a focus on economic cooperation, including on supply chain issues, and regular high-level meetings on various topics.
How is the 'China plus 1' strategy impacting Southeast Asian economies?
-The 'China plus 1' strategy, aimed at diversifying manufacturing operations, is stimulating more investment in Southeast Asian countries, benefiting significantly from the shift in supply chains.
What steps are being taken by Indonesia to strengthen its maritime capabilities?
-Indonesia is receiving patrol vessels from Japan and is considering enhancing its maritime capabilities through cooperation with the US and other countries.
What is the potential geopolitical impact of the South China Sea conflict on Indonesia and China's relationship?
-A potential conflict in the South China Sea could severely test the relationship between Indonesia and China, as well as the regional order with ASEAN at its core.
Outlines
🛃 Indonesia's Tariff War with China and Economic Diversification
Indonesia's trade minister, zukii Hassan, announced the imposition of safeguard tariffs ranging from 100% to 200% on various imported products, including footwear and ceramics, to protect domestic industries from foreign competition, particularly from China. This policy is a response to the influx of Chinese goods into the Indonesian market due to trade wars with Western countries. The Indonesian government is also drafting new regulations to strengthen previous ones and is considering imposing a 200% tariff on ceramics and clothes. The move is part of a broader strategy to reduce reliance on China and to strengthen economic cooperation with other countries, including the United States and Japan. The Indonesian government has named these measures 'Safeguard measures,' 'import tax bmtp,' and 'anti-dumping import tax bmad,' emphasizing their intention to protect domestic industries from severe damage due to increased imports.
📜 Indonesia's Trade Agreements and Strategic Partnerships
Indonesia is working on improving bilateral economic agreements with Japan, aiming to remove trade barriers and allow more Indonesian products into the Japanese market. The two countries are also looking to strengthen banking sector relations and are hoping to implement the revised Indonesia-Japan Economic Partnership Agreement (JPEPA) by the first quarter of 2024. Indonesia is positioning itself as a significant player in the global EV battery supply chain and has received a patrol vessel from Japan to enhance its maritime capabilities. Additionally, the country is engaging in economic cooperation with South Korea and the United States, with Microsoft investing in cloud services and AI development in Indonesia. These moves indicate Indonesia's proactive stance in economic diversification and strengthening strategic partnerships.
🌐 Indonesia's Regional Cooperation and Supply Chain Diversification
Indonesia is actively participating in regional cooperation organizations like ASEAN to strengthen economic ties within the region and beyond. The country is also collaborating with ASEAN and other countries to address security challenges and geopolitical impacts in the South China Sea. The 'China plus 1' strategy is driving investment into Southeast Asian countries as foreign and Chinese companies diversify their supply chains to reduce reliance on China. This has led to an increase in foreign direct investment (FDI) into ASEAN economies, with significant inflows from the United States, Japan, the European Union, and mainland China. ASEAN's first joint military exercise in Indonesian waters demonstrates a trend of extending cooperation into the military domain, responding to China's assertive activities in the region.
⚔️ Geopolitical Tensions and Potential Conflicts in the South China Sea
The South China Sea is a region of escalating tensions, with the potential for conflict testing the relationship between Indonesia and Beijing. Despite not being a main claimant in the dispute, Indonesia faces maritime boundary disputes with China. The Chinese military's construction of military facilities and conflicts with the Philippine military highlight the region's instability. The Philippines has established a coast guard outpost near Taiwan to guard against foreign threats and has signed an agreement with the United States for military access to bases in the country. Observers are concerned about the potential for extreme actions from the Chinese government, which could trigger an escalation of the South China Sea crisis.
Mindmap
Keywords
💡Tariff War
💡Safeguard Tariffs
💡Micro, Small, and Medium Enterprises (MSMEs)
💡Economic Cooperation
💡Comprehensive Strategic Partnership
💡Supply Chain
💡China Plus 1 Strategy
💡ASEAN (Association of Southeast Asian Nations)
💡South China Sea
💡Investment
💡Infrastructure
Highlights
Indonesia announced plans to impose safeguard tariffs of 100% to 200% on imported products from China, including footwear and ceramics, to protect domestic industries.
Indonesian Trade Minister Zukii Hassan warned that Indonesia can impose high tariffs like the US to ensure survival of local MSMEs and industries.
The new tariff policy will take effect immediately after relevant regulations are issued, impacting products like shoes, clothing, cosmetics and ceramics.
Indonesia is drafting new regulations to address previous ones that were not stringent enough in protecting domestic industries from cheap Chinese imports.
Indonesia's move has alarmed Chinese enterprises, as 36.3% of Indonesia's imports came from China in May of this year.
Indonesia is strengthening economic cooperation with other countries like Japan, India, South Korea, Europe and the US to reduce reliance on China.
Japan agreed to provide patrol vessels to Indonesia and strengthen cooperation in infrastructure, energy, security and defense.
Indonesia and Japan aim to implement a revised economic partnership agreement by Q1 2024 to improve trade relations and remove tariffs.
South Korean companies like Hyundai, Lotte Chemical and LG Electronics are shifting investments and production from China to Indonesia.
Indonesia and the US upgraded their relationship to a comprehensive strategic partnership, with plans for cooperation in critical minerals, semiconductors and climate.
Microsoft will invest $1.7 billion in Indonesia over 4 years to develop cloud services, AI and build data centers.
Apple CEO Tim Cook revealed plans to consider moving production lines to Indonesia due to its investment potential.
Indonesia is actively participating in regional cooperation organizations like ASEAN to strengthen economic and security ties in the Indo-Pacific.
The China Plus 1 strategy of diversifying supply chains away from China is benefiting Southeast Asian countries like Indonesia with increased FDI.
ASEAN conducted its first joint military exercise in Indonesian waters to develop skills in maritime security and humanitarian assistance.
Indonesia renamed part of the South China Sea as the North Natuna Sea to emphasize its exclusive economic zone amid conflicts with China.
A potential conflict in the South China Sea could test Indonesia-China relations and the regional order with ASEAN at its core.
The Philippines established a coast guard outpost near Taiwan to guard against foreign threats amid Chinese military activities in the South China Sea.
Transcripts
Indonesia to engage in a tariff war with
China highest tariff rate reaches
200% on June 28th Indonesian trade
Minister zukii Hassan announced that
Indonesia will impose Safeguard tariffs
of 100% to 200% on imported products
ranging from Footwear to Ceramics
reinitiating plans to protect domestic
Industries this policy will take effect
immediately once the relevant
regulations are issued the Indonesian
government seems to be issuing a warning
to Chinese Goods ziki Hassan further
stated the United States can impose a
200% tariff on imported Ceramics or
clothes we can do it as well to ensure
our micro small and medium Enterprises
and industries Will Survive and
Thrive Hassan explained that due to the
trade War Chinese products have been
shut out by Western countries and are
now flooding the Indonesian Market as a
result Indonesia has become a Gathering
Place for many Chinese Goods the
Indonesian government is also drafting
new regulations to address previous ones
that were not stringent enough the newly
announced tariff policy will take effect
after the relevant regulations are
issued impacting products such as shoes
clothing cosmetics and Ceramics it
appears that Indonesia is gradually
restricting the import of Chinese Goods
interestingly the Indonesian government
has given these tariff measures High
sounding names Safeguard measures import
tax bmtp and anti-dumping import tax
bmad
they sound quite catchy bmtp is a
national tax measure aimed at preventing
domestic industries from facing severe
damage due to a significant increase in
imported goods Indonesian Finance
Minister Shri malani indrawati stated
that the additional import tax bmad is
designed to protect the textile and
textile products industry from the
impact of imported goods as Southeast
Asia's largest economy Indonesia's move
has alarmed Chinese Enterprises an
operator of an international sports shoe
and apparel brand in China noted that
Indonesia as a populous country is in a
stage of Rapid Economic Development both
Indonesia and Vietnam have become
destinations for Global shoe
manufacturers to establish Supply bases
after moving out of China in recent
years chairman of China's anime
technology Wang XA long has a more
relaxed view competition is normal he
said the key is to understand who your
customers are and where your advantages
lie his words indeed reflect a sense of
leadership let's look at the data in May
of this year
36.3% of Indonesia's Imports came from
China it seems Indonesia may take some
measures against this main
supplier it appears that Indonesia is
taking a more proactive stance in the
economic field they have strengthened
economic cooperation with other
countries actively participated in Asian
Affairs and bolstered relations with the
United States Indonesia seems to be
adopting a firmer stand in its relations
with China however it remains to be seen
how this tariff war will eventually
unfold in recent years Indonesia has
implemented several measures in the
economic and Export sectors indicating
an increased awareness of countering
China analysts believe that firstly
Indonesia has begun actively promoting
economic cooperation and trade with
other countries and regions to reduce
its Reliance on China for instance they
have strengthened trade relations with
Asian countries such as India Japan and
South Korea as well as economic
cooperation with Europe and the United
States according to a report by voice of
America Indonesian president-elect proo
subbiano expressed in April during a
Tokyo meeting with Japanese prime
minister fumio Kisha that Indonesia and
Japan are long-term friends with a
Cooperative relationship and he hopes to
further strengthen the relationship
kashida welcomed provo's visit to Tokyo
and expressed to the Future Indonesian
president that the two countries are
long-term friends with shared
fundamental values and principles Japan
hopes to further strengthen cooperation
on Regional and Global issues as a
comprehensive strategic partner kashida
stated that Japan hopes to contribute to
the development of Indonesia's
infrastructure energy and other sectors
while strengthening security and defense
cooperation in 2023 Japan agreed to
provide Patrol vessels to Indonesia
caboo also held talks with Japanese
defense minister minoru kihara in a
statement Japan's Ministry of Defense
said that the defense Ministers of both
countries vouch to strengthen defense
cooperation after the meeting kihara
told reporters that Japan and Indonesia
are expanding joint exercises capacity
building and education programs in the
indopacific
region he said he is determined to
strengthen cooperation between the two
Maritime Nations to achieve a free and
open Indo Pacific region based on the
rule of law in December last year
Indonesian foreign prime minister Reno
marsudi stated that Indonesia and Japan
had agreed to remove more trade barriers
previously the two countries concluded
negotiations on improving the bilateral
economic agreement protocol in a
statement rno said that Japan would
allow more Indonesian products to enter
Japan including removing tariffs on
processed fishery Goods the two
countries will also improve relations in
the banking sector she added that both
sides hope the revised Indonesia Japan
economic partnership agreement J PA can
be implemented by the first quarter of
2024 although the agreement still needs
to be formally signed and ratified by
their respective parliaments after legal
review retno made the statement after
Indonesian president Joko Widodo held
bilateral talks with Japanese prime
minister fumio kishida during the Tokyo
Summit marking the 50th anniversary of
the friendship and cooperation between
Japan and aan previously Indonesia's
Ministry of trade stated that during
negotiations in Indonesia had requested
Japan to remove tariffs on its canned
tuna Imports the aim of the negotiations
was to further Advance the EPA which was
first signed in
2007 retno stated that during his talks
with kashida Joko emphasized the
importance of agreements between Jakarta
and Tokyo on critical minerals as
Indonesia seeks to position itself as a
significant player in the global EV
battery supply chain she mentioned that
Japan has also provided the IND Indian
coast guard with a patrol vessel worth 9
billion yen approximately $63 million us
to help Indonesia enhance its Maritime
capabilities on May 21st a Conference
was held at the Grand Hyatt Hotel in
Soul jointly organized by the Korean
Ministry of trade the Korea Indonesia
management association and cisa journal
in his opening remarks the executive
director and vice president of cisa
Journal one of the organizers of the
conference stated as our trade with
China remains stagnant Indonesia is
emerging as a new opportunity to replace
China Indonesia is the fourth most
populous country in the world with 280
million people and its potential is
Limitless Cho yuno a research Committee
Member at the Korea institute for
industrial economics and trade mentioned
that amid the reorganization of
internalized Supply chains centered on
the United States the cheap labor market
is shifting from China to Southeast
Asian countries like Indonesia and
Vietnam she also noted that South Korean
companies investments in Indonesia have
significantly increased while Hyundai's
third plant in China ceased operations
it is building a production base with a
capacity of 250,000 units in Indonesia
and plans to expand its electric vehicle
production line lot chemical and LG
Electronics have also liquidated their
businesses in China and shifted to
Indonesia Dr Kim Nong Chul of Soul
365 MC lipo section Hospital which has
successfully entered the Indonesian
Market also emphasized that brand
expansion is the key to success in
overseas markets especially considering
incidents in China where hospitals
illegally used Korean technology Dr Kim
said that in September 2023 the sales of
the first 365 MC store in Indonesia
increased 12 times 7 months after its
establishment and the opening ceremony
for the second store is planned for May
23rd 2024 with a listing on the
Indonesian stock market expected in
2026 additionally media reports indicate
that on November 13th last year
Indonesian president Joko visited the
White House in Washington and held talks
with US President Joe Biden following
their meeting the White House officially
announced that the two countries had
upgraded their relationship to a
comprehensive strategic partnership
before their talks the two leaders made
brief remarks to the media discussing
the upgrade in their bilateral
relationship ship Biden said this will
Mark a new era in relations between the
United States and Indonesia across the
board Joko mentioned that the United
States is one of Indonesia's most
important Partners the US is one of the
most important partners for Indonesia
and we agree to elevate our partnership
into comprehensive strategic partnership
but most importantly we have to give a
real meaning to it for Indonesia
economic cooperation is priority
including on Supply chains issues
in addition to upgrading their bilateral
relationship the two sides also
announced cooperation in several areas
including critical minerals the
semiconductor supply chain and climate
issues the two countries will also hold
regular highlevel meetings such as the
Indonesia US security dialogue the US
Indonesia bilateral defense dialogue and
non-military exchanges moreover on April
30th Microsoft CEO SAA nadela announced
that Microsoft would invest 1.7 billion
Dollar in Indonesia over the next four
years to develop cloud services and
artificial intelligence including
building data
centers Indonesian minister of
communication and information budy Ari
Saar stated that nadela met with the
outgoing president Joko Widodo and the
current cabinet ministers earlier on
April 30th to discuss joint AI research
and talent development the minister
mentioned that Widodo suggested
Microsoft consider locating its data
center in in the Resort destination of
Bali or in the new capital city of n
santara currently under construction in
the jungles of Borneo nadela stated that
by 2025 Microsoft will train 2.5 million
people in Southeast Asia to use
artificial intelligence including
840,000 in Indonesia on April 17th
during a meeting with Indonesian
president Joko we Doo Apple CEO Tim Cook
revealed that the company is considering
moving its production lines to Indonesia
cook said I think the investment ability
in Indonesia is endless I think that
there's a lot of great places to invest
and we're investing we believe in the
country additionally Indonesia actively
participates in the aan and other
Regional cooperation organizations
strengthening economic cooperation both
within the region and Beyond through
multilateral platforms Indonesia also
collaborates with oan and other
countries to jointly address security
challenges and geopolitical impacts in
the South China Sea region
according to a June 23rd report by CNBC
COI Lim co-founder and managing partner
of Southeast Asia Venture Capital firm
monks Hill Ventures said that as foreign
and Chinese companies diversify their
supply chains and businesses southeast
Asia stands to benefit significantly
from the China plus1 strategy he added
these shifts began during the pandemic
lockdowns and now the geopolitical
tensions have accelerated these
activities the China plus1 strategy aims
to to diversify manufacturing operations
with foreign and Chinese companies
moving part of their production to other
countries to reduce risks associated
with complete Reliance on the Chinese
market or supply chain this supply chain
diversification strategy has stimulated
more investment in aian countries
according to a report by ocbc Bank
Economist in may direct foreign
investment FDI into aian economies
including Indonesia Malaysia the
Philippines Thailand Singapore and
Vietnam has increased to $236 billion US
in
2023 compared to an annual average of
billion dollar from 2020 to 2022 with
inflows mainly from the United States
Japan the European Union as well as
mainland China and Hong Kong on
September 19th last year aian conducted
its first joint military exercise in
Indonesian Waters a mid- expanding
Chinese military activities in the South
China Sea Indonesia as the aian chair at
the time stated that the non-combat aian
solidarity exercise around the Nuna
Islands aimed to develop military skills
including Maritime security and patrols
as well as humanitarian assistance and
disaster relief operations after the
opening ceremony Indonesian Chief
Admiral yudo margono told the media that
aan had agreed to hold annual military
exercises which would expand to full
scale War exercises involving land sea
and air forces in the future margono
said those who carry out any exploration
or activities in that area must not
violate State territory that has been
clearly regulated by the United Nations
convention on the law of the sea when
asked if oan was sending a stronger
message against China's sovereignty
claims in the South China Sea margono
replied we have had a Firm Stance
Indonesia is a leading Nation within oan
although Indonesia is not a claimant in
the South China Sea its exclusive
economic zone in the north Nuna sea
overlap with China's n-h line leading to
occasional conflicts in 2017 Indonesia
renamed part of the South China Sea as
the North natuna Sea to emphasize its
exclusive economic zone increasing
activities by Chinese Coast Guard in the
area prompted the Indonesian Navy to
conduct a large-scale military exercise
in July
2020 last June during the 20th assian
Chiefs of Defense Forces meeting held in
Bali Indonesia a document was approved
to to establish the concept of an aian
Military Intelligence Community amch
observers have noted a trend of aian
countries extending their cooperation
from political and economic Realms into
the military domain this joint military
exercise by aian Nations is seen as a
stronger response to China's
increasingly assertive activities in the
region the first joint exercise among
aian member states is also considered a
historic step on May 24th of this year
the South China Morning Post cited a
warning from a major Chinese Think Tank
suggesting that a potential conflict in
the South China Sea could test the
relationship between Indonesia and
Beijing deputy director of the southeast
Asia and Oceania Research Institute at
the China Institutes of contemporary
international relations Lo yongkun
stated that whether Jakarta can maintain
its relationship with Beijing remains to
be seen although Indonesia is not one of
the main claimants in the South China
Sea dispute Jakarta and Beijing face
Maritime boundary disputes La believes
that if a conflict were to erupt in the
South China Sea Under the current
circumstances the relationship between
China and Indonesia as well as China aan
relations and interests and the regional
order with aan at its core would face
severe tests potentially triggering
changes in the regional geopolitical
landscape recently the Chinese military
has not only been constructing
large-scale military facilities and
damaging natural reefs in the disputed
areas of the South China Sea but has
also had multiple conflicts with the
Philippine military including using
water cannons against Philippine vessels
highlighting tensions in the region in
the latest incident China deployed a
large number of vessels including Coast
Guard ships attempting to block a
civilian protest flotilla from the
Philippines further escalating the
situation on May 24th according to
reports from Voice of America and other
media the Philippines established a
coast guard outpost on its northern
islands within 150 k omers of Taiwan to
guard against foreign threats amid
Chinese military activities observers
are concerned about potential extreme
actions from the Chinese government and
believe the current tensions between
China and the Philippines could be a
trigger for an escalation of the South
China Sea crisis to counter the Chinese
threat the United States and the
Philippines signed an agreement granting
the US military access to nine bases in
the Philippines in the Philippines noted
that compared to Beijing the Philippines
military forces are much smaller the
presence of the US troops would provide
protection regardless of the
circumstance
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