Jakarta. A senior economist said Thursday that Indonesia should try to get much closer to the China-led BRICS trade-wise after US President Donald Trump launched sweeping tariffs on nearly all of Washington’s trading partners.

Trump’s latest tariffs have sparked global uproars as the new policy could ignite a trade war. In the freshly inked executive order, Indonesia would get 32 percent reciprocal tariffs, while the rates for other countries can go as high as 49 percent. Trump even tries to justify the retaliatory tariffs, claiming that Indonesia has been charging the US with much higher rates of 64 percent. 

Trump’s team had added trade barriers and currency manipulation to the calculations. The White House also said that Jakarta deserved the new tariffs for its local content requirements, which require American investors to locally source parts of its components.

Speaking to the Jakarta Globe, analyst Bhima Yudhistira said that Indonesia should try to make some negotiations with the US.  The 32 percent reciprocal tariffs will take effect on April 9, although a blanket 10 percent rate will enter into force on April 5. Bhima said there was still time for Indonesia to convince the US to slash the tariffs.

“But chances are slim [for the US to make any actual changes]. Indonesia’s next move should be to strengthen its intra-trade and investment cooperation with BRICS nations. This BRICS bloc is quite prospective amid the trade war waged by the US. We can also reach out to the Middle East or the Gulf Cooperation Council [GCC] as an alternative,” Bhima said.

BRICS has Brazil, Russia, India, China, and South Africa as its early members. The United Arab Emirates (UAE),  Ethiopia, Egypt, Iran, and Indonesia eventually belong to this group of emerging economies. Trump has been critical of BRICS. He has even threatened to impose 100 percent tariffs on the international group’s members should they try to replace the American dollar, the world’s reserve currency. 

Indonesia has been growing closer to BRICS over the past months. Just last week, President Prabowo Subianto announced Indonesia would join the BRICS-backed lender: the New Development Bank (NDB). The GCC, on the other hand, is a separate economic union comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and BRICS member UAE.

Asked whether Indonesia bolstering its trade relations with BRICS could prompt Trump to raise the tariffs, Bhima said that would be an unlikely case as the higher the tariffs, the more expensive the BRICS imports -- including goods manufactured from imported parts -- would be for American consumers.

“The US will probably think twice before imposing a tariff hike on BRICS nations. The current tariffs are already way too steep. American consumers would definitely complain [if there is another increase],” Bhima said. 

Within BRICS, China is Indonesia's largest trading partner. Bilateral trade even grew from $127.8 billion in 2023 to $135 billion the following year, official figures showed. Trump has slapped 34 percent additional reciprocal tariffs on Chinese imports in his latest executive order. BRICS members India and South Africa get 26 percent and 30 percent rates, respectively. Russia is missing on the retaliatory tariff list as Trump feels Moscow has already faced economic sanctions following its invasion of Ukraine, according to news outlet Axios. Other members like Brazil, Egypt, and the UAE will be subject to the 10 percent baseline tariff.

In a separate press statement, analyst Eisha Maghfiruha Rachbini said that Trump’s latest trade policy would take a huge toll on Indonesian textile, footwear, electronics, and palm oil industries, to name a few. She urged Indonesia to look for non-traditional markets by taking advantage of existing trade deals. 

“So exporters and industries affected by the new tariffs can shift their export destinations,” said Eisha, who is also a director at the economic think-tank INDEF.

At the time of writing, the Indonesian government has yet to issue an official response to Trump’s tariffs. Senior minister Airlangga Hartarto and other senior government officials were supposed to hold a press conference on Thursday morning, but the briefing got postponed until further notice. His press team said that the government wished to have “comprehensive” internal discussions before addressing the media.

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