Indonesia Launches ‘Tariff War’ With China! Rates Soar to 200%! What China Feared Has Happened

China Observer

12 Jul 202417:19

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

00:00

🛃 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.

05:00

📜 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.

10:02

🌐 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.

15:02

⚔️ 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

A tariff war refers to a situation where countries impose retaliatory tariffs on each other's goods, often as a result of trade disputes. In the video's context, Indonesia is engaging in a tariff war with China, imposing safeguard tariffs of 100% to 200% on imported products to protect domestic industries. This action is part of a broader economic strategy to counter the influx of Chinese goods into the Indonesian market due to trade restrictions imposed by Western countries.

💡Safeguard Tariffs

Safeguard tariffs are temporary trade barriers imposed to protect domestic industries from a sudden surge in imports. The video mentions that Indonesia will impose these tariffs on a range of products from footwear to ceramics, illustrating the government's intent to shield local producers from foreign competition, particularly from Chinese imports that have been redirected to Indonesia due to trade wars with Western countries.

💡Micro, Small, and Medium Enterprises (MSMEs)

MSMEs are business entities classified by size and are crucial for economic development and job creation. In the script, Indonesian Trade Minister Zulki Hassan emphasizes the importance of safeguard tariffs to ensure the survival and growth of MSMEs in the face of competition from Chinese products, which have been flooding the Indonesian market due to trade restrictions elsewhere.

💡Economic Cooperation

Economic cooperation refers to the joint efforts by countries to enhance economic relations and mutual benefits. The video discusses Indonesia's efforts to strengthen economic ties with other nations, such as India, Japan, South Korea, Europe, and the United States, as a way to diversify its trade partners and reduce reliance on China.

💡Comprehensive Strategic Partnership

A comprehensive strategic partnership is a high level of diplomatic relationship between countries, encompassing various fields of cooperation. The video highlights the upgrade of relations between Indonesia and the United States to a comprehensive strategic partnership, indicating a deepening of bilateral ties in economic, security, and other areas.

💡Supply Chain

A supply chain is the network of organizations, people, activities, information, and resources involved in producing and delivering a product or service. The script mentions the reorganization of supply chains, with companies shifting production from China to Southeast Asian countries like Indonesia and Vietnam, due to geopolitical tensions and trade wars.

💡China Plus 1 Strategy

The 'China Plus 1' strategy is a business approach where companies diversify their manufacturing operations by moving part of their production to other countries to mitigate risks associated with over-reliance on the Chinese market. The video suggests that Southeast Asian countries, including Indonesia, are benefiting significantly from this strategy as companies seek to diversify their supply chains.

💡ASEAN (Association of Southeast Asian Nations)

ASEAN is a regional intergovernmental organization comprising ten Southeast Asian countries, which promotes intercultural and economic cooperation. The video discusses ASEAN's role in strengthening economic cooperation within the region and beyond, as well as its joint military exercises, which are seen as a response to China's assertive activities in the South China Sea.

💡South China Sea

The South China Sea is a contested region with overlapping territorial claims by several countries, including China. The video mentions the South China Sea in the context of geopolitical tensions and military activities, highlighting the potential for conflict and its implications for regional stability and the relationships between countries like Indonesia and China.

💡Investment

Investment in this context refers to the commitment of funds or resources for the purpose of financial return or other benefits. The video cites examples of companies like Microsoft and Apple considering or making significant investments in Indonesia, indicating the country's potential as a destination for foreign direct investment and its role in the global supply chain.

💡Infrastructure

Infrastructure refers to the basic physical and organizational structures needed for the operation of a society or enterprise. The script mentions Japan's contribution to Indonesia's infrastructure development, including the provision of patrol vessels and support in sectors like energy, which are crucial for the country's economic growth and security.

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.